2012west0762 ( October 05, 2012)

‘Transactions between persons who are not persons with special interest', ‘no justifiable reason exists in terms of transaction practices';

“The acquisition of shares by the exercise of preemptive rights in this case cannot be deemed as a justifiable ground for transaction practice under Article 42(3) of the former Inheritance Tax and Gift Tax Act, which is a transaction between parties who are not related parties.” Thus, the instant taxation disposition is lawful,” and [Contents of judgment]

2012Guhap40582 Revocation of Disposition of Imposing gift tax

Park AA

Head of the District Tax Office

October 11, 2013

December 3, 2013

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposition of gift tax OOO on November 1, 201 against the Plaintiff is revoked.

1. Details of the disposition;

Types of bonds;

Bonds with non-registered non-guaranteed private placement and bonds with warrants;

The total face value of bonds shall be the face value of the bonds

OOO

Interest Rate of Bonds

The surface rate of 0% / the maturity guarantee profit rate of 4.00%

The maturity date of bonds

May 18, 2010

Method of issuance of bonds

Private placement

The value of the event (won/State)

OOO

Whether to separate preemptive rights

Separation

Period of Time

From May 18, 2008 to April 18, 2010 (23 months)

Re-Adjustment (Re-Adjustment) Clause

When a stock price lowers than the price of the event, the amount of the event price shall be adjusted every six months.

(for up to 70 per cent, i.e. 30 per cent discount)

“A. A. BB (hereinafter “B”) decided on May 16, 2007 to issue bonds with warrants with the intent to acquire the shares of the major shareholders of the CCC (hereinafter “CC”), and entered into an underwriting contract with DD Investment Securities Co., Ltd. on May 18, 2007. DD Investment Securities Co., Ltd. separated only preemptive rights on May 22, 2007, and transferred the total amount of 609,137 shares, including that the Plaintiff transferred 72,463 shares (hereinafter “instant preemptive rights”) to the Plaintiff. B. around November 19, 2008, the exercise price per share, which the Plaintiff acquired and held the instant preemptive rights, was converted from OOO to 30% of the initial acquisition price per share, and the Plaintiff transferred the total amount of 609,137 shares to the Plaintiff and 5 others.

C. From September 5, 201 to September 29, 2011, the director of the Central District Tax Office: (a) deemed that the Plaintiff obtained the benefits under Article 42(1)3 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 201; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) in relation to the exercise of the instant right to exercise new shares; and (b) notified the Defendant of the said benefits by calculating the amount of OOO on November 1, 201; and (c) the Defendant decided and notified the Plaintiff of the determination and notification of OOO of the gift tax on donation as of February 23, 2010 (hereinafter referred to as the “instant disposition”); and (d) the Plaintiff dissatisfied with the instant disposition and dismissed the Plaintiff’s claim for adjudication on January 6, 2012.

Facts without any dispute, Gap's 1, 2, Eul's 1 to 5, all or part of the evidence, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

“The Plaintiff’s acquisition of shares by exercising the preemptive right of this case is a legitimate investment that is a transaction between unrelated parties and subsequent investment gains arising from the acquisition of preemptive right. Therefore, given that the said transaction is “justifiable cause under the transaction practices stipulated in Article 42(3) of the former Inheritance Tax and Gift Tax Act”, gift tax cannot be imposed on the said transaction because it is not subject to Article 42(1) of the former Inheritance Tax and Gift Tax Act, the disposition of this case made on a different premise is unlawful.”

It is as shown in the attached Form.

C. Determination

In addition, comprehensively taking account of the aforementioned facts and the purport of the entire argument, CE is additionally acknowledged as follows: (a) BB was working for three shareholders and professional managers of CCC before the merger with CCC; (b) after January 2008, BB was working for a joint representative director of the CCC (BB changed its mission on January 8, 2008 to CCC) after the merger with CCC; (c) resigned on June 27, 2011; and (d) the Plaintiff was solicited to make an investment from the above E, which is a pre-determined with the university, and acquired shares by taking over the instant preemptive right. In light of such circumstances acknowledged by the factual basis, i.e., (b) BB was issued by private placement method, i.e., whether DD investment securities were acquired from BB and 40,000,000 won, and (d) the Plaintiff’s acquisition of the preemptive right after the acquisition of the Plaintiff’s shares by means of the CCC’s exercise of preemptive right.

Therefore, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.