Seoul Administrative Court 201Guhap26992, 07.19

Review Transfer 2010-0271 (Law No. 17, 2011)

The application of the provision of wrongful calculation based on the transfer of low price by the market price is legitimate due to the complementary evaluation method.

(As in the first instance judgment, it is difficult to see that the transaction value is the result of a reasonable price negotiation by transferring stocks to an infant in a special relationship, and it is difficult to see that the market value calculated by an accounting firm falls under the market value at the time of transaction in violation of the method of calculation prescribed by the Act, such as adding liabilities with no finalized amount

Article 101 of the Income Tax Act

Article 35 of the Inheritance Tax and Gift Tax Act

2012Nu26458 Revocation of Disposition of Imposing capital gains tax

1.A 2. branchB 3.LandCC

Samsung Head of Samsung Tax Office

Seoul Administrative Court Decision 2011Guhap26992 decided July 19, 2012

September 13, 2013

September 27, 2013

The plaintiffs' appeal is dismissed.

The plaintiffs' claims that have been changed in exchange in the trial are dismissed.

All costs of litigation shall be borne by the plaintiffs.

The judgment of the first instance court is revoked. The defendant revoked each disposition of imposition on the plaintiffs as stated in the revised statement of imposition details in the attached Table 2, which the defendant made to the plaintiffs [the plaintiffs sought revocation of each disposition of imposition on the attached Table 1, which was stated in the attached Table 1, and then changed the purport of the claim to the additional tax

1. Quotation of judgment of the first instance;

The part of the second to third of the judgment of the court of first instance shall be placed in accordance with paragraph 2 below, and each of the dispositions of this case shall be placed in accordance with attached Table 1, attached Table 3, and each of the dispositions of this case shall be placed in accordance with attached Table 3, attached Table 3, attached Table 3, and attached Table 3, and attached Table 11, 3, 3, 2 below shall be placed in the judgment of the court of first instance, except for addition of the following 3, 3, 2, respectively.

2. The height portion (the name of two pages 14 to 3 pages 2).

B. The Defendant assessed the price of the instant shares traded by the Plaintiffs as OOO (as of November 30, 2007 and December 1, 2007) and OOOO (as of December 28, 2007) pursuant to the supplementary assessment method under Article 63 (1) (c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same) by deeming that the purchase and sale price of the instant shares could not be deemed the market price as a transaction between related parties. The Defendant determined that the purchaser of shares did not pay the gift tax under Article 101 (1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same shall apply) and the gift tax under Article 35 of the Inheritance Tax and Gift Tax Act.

3. The addition;

(a)in addition to the third column subsequent to the third column;

D. After that, the defendant revoked the additional tax amount of the above disposition against the plaintiffs ex officio, and served a tax notice stating the type of and grounds for calculation of the additional tax as shown in the annexed Form 2 revised statement of imposition disposition, thereby imposing additional tax again (hereinafter referred to as "each disposition of imposition in the annexed Form 2 changed statement of imposition disposition").

(b)No. 11. 2. A addition to:

The Plaintiffs asserted that the Defendant’s imposition of capital gains tax on Plaintiff DoA, etc., the transferor of shares, and that the imposition of gift tax on Plaintiff DoCC, etc., the transferee of shares constitutes double taxation and is unlawful.

However, since gift tax and transfer income tax vary between the requirements for the establishment of tax liability, timing, and taxpayers, in cases where the tax authorities impose gift tax and transfer income tax, each of them should be judged independently in accordance with the substance of each taxation requirement, and if both of them correspond to the taxation requirement, only one taxation is possible unless there are any special provisions excluding double application. Article 2(2) of the Inheritance Tax and Gift Tax Act provides that gift tax shall not be imposed when the donee imposes income tax on the donated donated property provided for in paragraph (1) of the same Article. However, in light of the fact that the content and language of the gift tax and the gift tax have the nature of as a supplement tax of income tax, it does not constitute a special provision excluding double application of the provisions on transfer income tax as the gift tax where income tax is imposed on the donee (see, e.g., Supreme Court Decision 2003Du11575, Dec. 10, 204). Therefore, since the Defendant calculated the market price by considering the supplement method between the parties with special relationship and thus, it cannot be viewed that the Plaintiff’s transfer or transferee.

4. Conclusion

Therefore, the judgment of the court of first instance is justified, and therefore, the appeal by the plaintiffs is dismissed as it is without merit, and the changed plaintiffs' claim that has been exchanged in the trial is dismissed as it is without merit. It is so decided as per Disposition.