Seocho 209west 2710 ( December 24, 2009)

Where the old stocks are reduced without compensation by 100% and new stocks are acquired and transferred through capital increase with new stocks;

Where the Plaintiff retires 100% of the old stocks and acquires new stocks and transfers them through the subscription for new stocks, the Plaintiff asserts that the acquisition value of the old stocks shall be included in the necessary expenses in calculating the acquisition value of the new stocks, but this cannot be deducted from the transfer value of the stocks before the retirement due to a separate capital gains

The contents of the decision shall be the same as attached.

1. The Defendant’s disposition of imposing capital gains tax of KRW 88,446,453 for the year 2004 against the Plaintiff on September 1, 2008, which exceeds KRW 68,227,692, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. 3/4 of the costs of lawsuit shall be borne by the plaintiff, and the remainder by the defendant, respectively.

The Defendant’s disposition of imposition of KRW 88,446,453 on September 1, 2008 against the Plaintiff was revoked.

1. Circumstances of the disposition;

A. The Plaintiff initially owned 450,151 shares (the total face value of KRW 2,250,755,000; hereinafter referred to as “the shares before the retirement of this case”) equivalent to 42.61% of the total outstanding shares of 1,056,400 shares (the total face value of KRW 5,000) of △△△ Bank Co., Ltd. (hereinafter referred to as “△△ Bank”). The Plaintiff was a major shareholder and the representative director, who held 39,923 shares of the instant △△△ Bank (the total face value of KRW 19,615,00). The Plaintiff owned 39,923 shares of the instant △△ Bank (the total face value of KRW 19,615,00).

B. However, the above △△ Bank was designated as an insolvent financial institution by the Financial Supervisory Commission, and its business was suspended from February 20, 2002 to May 3, 2002. On April 17, 2002, by opening a temporary general meeting of shareholders, decided to reduce capital free of charge to 100% of the issued shares, and by opening a board of directors on the same day, decided to newly increase capital of KRW 500,000 and KRW 3 billion for the same reason.

C. According to each of the above resolutions, the existing shares of △△ Bank was retired by 100% on April 29, 2002, and 3 billion won was paid for capital increase. At the time of the above capital increase, the remaining shareholders renounced all of the subscription of new shares. However, the 100,000 shares were acquired by the Plaintiff through additional investment of 50,000 won (hereinafter “the shares of this case”).

D. On January 28, 2004, the Minister of Strategy and Finance and the Plaintiff entered into a contract with a stock company to transfer all of the shares and management rights of the above △△ Bank for KRW 5 billion, and imposed taxes on the following:

E. However, on August 18, 2005, the head of ○○ Tax Office denied both the above transfer value and acquisition value reported by the Plaintiff on August 18, 2005, and then the transfer value shall be KRW 83,333,333 ( = 5,00,000,000 KRW KRW 1,60,000 per share) calculated by multiplying the Plaintiff’s share holdings in total by the transfer value of the total shares. The transfer value shall be deemed KRW 50 million ( = 5,00 per share with face value of KRW 5,00 per share) and imposed KRW 36,687,930 per share with face value of KRW 36,687,930 per share with face value of KRW 200,000,000, KRW 833,333,33333,16,666,67A29, and KRW 3056,665,295.

F. Accordingly, the Plaintiff filed a request for a trial with the National Tax Tribunal to revoke the above taxation. On June 30, 2006, the National Tax Tribunal decided to dismiss the claim for gift tax. The transfer value shall be calculated by multiplying the entire transfer value by the Plaintiff’s shareholding ratio. However, the acquisition value shall include the amount required to acquire 176,066 shares out of the subscription price of the shares before the retirement of the instant case ( = 1,056,40 shares at the time of transfer of X without compensation).

G. Meanwhile, the Plaintiff filed a revocation lawsuit with the Seoul Administrative Court on the above gift tax portion. In that lawsuit, the court rendered a judgment revoking the imposition of gift tax on the ground that the Plaintiff’s transfer value of the instant shares was not KRW 833,333,333, which was calculated by multiplying the Plaintiff’s share ownership by the total share ownership transfer value of the instant △△ Bank’s total share transfer value of KRW 5 billion (Seoul Administrative Court 2006, 34012), but also KRW 2 billion (Seoul Administrative Court 2006, 2006, 34012

H. After that, on September 1, 2008, the Defendant issued a disposition of this case imposing and notifying KRW 2 billion for the transfer value of the shares in this case to the Plaintiff, and KRW 1,380,330,00 for the acquisition value of the shares in this case ( = KRW 500,000 for the face value of shares in this case + KRW 880,30,300 for the acceptance value of 176,066 for the shares issued by the National Tax Tribunal to be included in the acquisition value for the Plaintiff’s capital reduction without compensation + KRW 880,30,300 for the shares in this case) and the necessary expenses calculated gains by considering the amount as KRW 4,16,67 for the gains from transfer, adding additional tax for the failure to report and additional tax for the failure to pay in good faith to the Plaintiff, but correcting the necessary expenses on May 3, 201 to KRW 10 for 89,296,484,465.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 14 (including paper numbers; hereinafter the same shall apply), Eul evidence Nos. 1 through 4, the purport of the whole pleadings

2. Whether the dispositions of the instant case are legal.

A. The plaintiff's principal

(1) Where a part of the shares were reduced, the acquisition value of the reduced shares is included in the acquisition value of the transferred shares, but it is unlawful to include only a part of the acquisition value of the shares prior to the retirement of this case on the ground that the shares were reduced due to the total reduction of capital.

(2) While holding 4.50,151 shares of the savings bank of this case, the Plaintiff acquired 1,50,151 shares on April 30, 2002, and held 5.50,151 shares, among which 4.50,151 shares were retired, and thus, the Plaintiff’s disposition of this case, which was otherwise reported, is unlawful even if it should be included in the acquisition value of the shares of this case.

(3) Since the Defendant erroneously imposed a transfer income tax on August 18, 2005, but the imposition of a gift tax is revoked and imposes a transfer income tax again, the additional payment for unfaithful payment shall be imposed only for the period from June 1, 2005 to August 18, 2005.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) First of all, the Plaintiff’s acquisition of 10,00 shares is higher than the retirement of 450,151 shares prior to the retirement of this case. Thus, according to each of the evidence Nos. 11, 12, and 17 as to the assertion that the acquisition value of shares prior to the retirement of this case should be included in the acquisition value of shares prior to the retirement of this case, the Governor of the Financial Supervisory Service sent to the administrator of △△ Bank on April 16, 2002 a document demanding the complete reduction of capital. Accordingly, on April 17, 2002, the current △△ Bank’s shareholders’ general meeting of shareholders reduces 100% of the paid-in capital as well as new capital increase, and the Plaintiff’s assertion that the shares were again registered as 00 shares prior to the retirement of this case’s shares, and then the Plaintiff’s total amount of shares acquired as 00 shares prior to the retirement of 00 won prior to the retirement of this case’s shares.

(2) Next, we examine the argument that the acquisition value of the instant shares should include KRW 450,151 (2,250,755,000), including the acquisition value of the instant shares prior to the instant retirement, as in the case of a partial capital reduction.

In accordance with Articles 94(1)3-3 and 97(1)1-b of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005), and Articles 89(1)1 and 163(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005), the acquisition value to be deducted as necessary expenses from the transfer value of the stocks of this case shall be the actual transaction value required for the acquisition of the stocks of this case. In light of the facts recognized earlier, the acquisition value of the real estate of this case shall be an amount calculated by adding the securities transaction tax to KRW 500 million. Since the stocks of this case before the retirement are already retired before the acquisition of the stocks of this case, the amount required for the acquisition of the stocks of this case shall not be deemed to be the amount required for the acquisition of the stocks of this case.

The Plaintiff asserts that the Plaintiff’s burden of capital gains tax is too harsh to the Plaintiff on the ground that the Plaintiff’s shares were entirely retired at the Financial Supervisory Service’s reflective request even though the overall loss incurred in relation to the operation and transfer of the instant △△ Bank.

However, according to the evidence evidence Nos. 7 through 14, △△ Bank of this case, as of October 2001, determined its liabilities as of the end of 8.2 billion won or more of its assets as insolvent financial institutions under Article 2 subparag. 3 (a) of the former Act on the Structural Improvement of the Financial Industry (amended by Act No. 6807 of Dec. 26, 2002). It can be acknowledged that the whole stocks were retired by the resolution of the general meeting of shareholders pursuant to Article 1110 of the same Act at the recommendation or demand of the Governor of the Financial Supervisory Service under Article 1110 of the same Act. Accordingly, the stocks held by the Plaintiff against the savings bank of this case before their retirement are not retired at the non-voluntary request of the Governor of the Financial Supervisory Service under the condition that their economic value remains. It is difficult to secure additional economic value at the time of their retirement or only a part of its capital increase, and thus, it can not be seen that the Plaintiff already retired the shares before the retirement of the shares by the savings bank of this case and its acquisition value.

Therefore, the plaintiff's assertion on the above part is without merit.

(3) On August 19, 2005, regarding the assertion that the additional payment for the period after August 19, 2005 was illegal, as seen earlier, the Defendant: (a) deemed part of the Plaintiff’s transfer value to be donated by the KAA; and (b) rendered a decision to correct the transfer income tax by the National Tax Tribunal; (c) subsequently, the disposition of gift tax was revoked in administrative litigation; and (d) the Defendant issued the instant disposition in accordance with the judgment of the administrative litigation and the decision of the National Tax Tribunal; (b) subsequently, the Defendant erroneously imposed the gift tax; and (c) made a decision to correct the transfer income tax by the National Tax Tribunal (if the transfer value and acquisition value of the instant shares are calculated in accordance with the method recognized by the National Tax Tribunal, the Plaintiff’s transfer income tax should be calculated in accordance with the method recognized by the National Tax Tribunal). Accordingly, the Plaintiff’s assertion on August 19, 2005 is justified.

(4) If a legitimate amount of tax is to be calculated again with the exception of the additional payment for the erroneous payment after August 19, 2005 among the dispositions of this case, it shall be KRW 68,227,692 as shown in the attached Table of Tax Accounting. Therefore, the part exceeding KRW 68,227,692 among the dispositions of this case shall be revoked as it is unlawful.

3. Conclusion

Therefore, the plaintiff's claim is justified within the above scope of recognition, and the remaining claims are without merit, and it is dismissed. It is so decided as per Disposition.