(a) Where a merged corporation merges while operating an extinguished corporation independently after purchasing the entire stocks of the merged corporation, whether the transfer value of the stocks can be deemed a merger subsidy (affirmative);

(b) Whether to impose additional tax on non-submission of payment records for liquidation income (negative)

A. Where a merged corporation, as provided in Article 117-2 of the Enforcement Decree of the Corporate Tax Act, has combined stocks acquired prior to the merger, "if the acquisition is deemed to have unfairly reduced the liquidation income of the merged corporation" does not necessarily mean a subjective element, and it is a series of transaction processes from the acquisition of the stocks of the merged corporation to the merger, etc., which should be judged in consideration of the purpose or intent to unfairly reduce the liquidation income. Thus, even if the merged corporation purchased the entire stocks from the stockholders of the merged corporation to operate an independent corporation after selecting a new officer, and then merged with the merged corporation, the liquidation income of the merged corporation would be the amount after deducting the paid-in capital from the transfer value of the stocks corresponding to the merger subsidy, if the merged corporation acquired the stocks of the merged corporation prior to the merger and paid the price for the merger, the liquidation income of the merged corporation would not be deemed to have been unjustly reduced if the transfer value was excluded from the liquidation income calculation of the merged corporation.

B. Article 52-2 of the Corporate Tax Act does not apply mutatis mutandis to the additional tax without filing a payment record, Article 41(4) which is the provision for the additional tax not filed. Thus, the additional tax on liquidation income cannot be levied on the non-submission of the payment

(a) Article 43(3) of the Corporate Tax Act; Article 117-2 of the Enforcement Decree of the Corporate Tax Act; Articles 52-2 and 41(4) of the Corporate Tax Act;

[Plaintiff-Appellant-Appellee] Plaintiff 1 and 1 other (Law Firm Han, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant-appellee)

Dongyang Petroleum Co., Ltd., Counsel for the defendant-appellant-appellant

The Director of Incheon Tax Office

Seoul High Court Decision 88Gu13313 delivered on August 18, 1989

Each appeal shall be dismissed.

The costs of appeal shall be assessed against each party.

1. The plaintiff's attorney's grounds of appeal Nos. 1 and 2 are also examined.

According to the reasoning of the judgment below, on January 9, 1984, the court below acknowledged the following facts based on macroficial evidence: (a) 8 shareholders of Kudong Commercial Co., Ltd. (the non-party company changed its shares to extreme energy; hereinafter the non-party company) were transferred to the plaintiff on January 9, 1984 in amount to KRW 351,145,342; and (b) concluded a merger contract with which the plaintiff was merged into the non-party company at the same time on September 30, 1985, while the non-party company reported the tax base and tax amount of the corporate tax, and reported the merger amount to KRW 150,00,000 when the share investment amount that the non-party company received

However, in full view of the evidence adopted by the court below, including evidence Nos. 1-7 and No. 2-3 as pointed out by the theory of lawsuit, the non-party company shall be operated as an independent corporation even after the Plaintiff acquired the entire shares from eight shareholders of the non-party company on Jan. 9, 1984, and it can be recognized that the merger contract was concluded between the Plaintiff and the non-party company on Jul. 27, 1985. Thus, the court below erred by misapprehending that the merger contract was already concluded between the Plaintiff and the non-party company on Jan. 9, 1984, and it is inconsistent with the reasoning of the court below that the Plaintiff took the method of merger after the Plaintiff acquired the shares of the non-party company.

However, in the event that a merged corporation, as provided in Article 117-2 of the Enforcement Decree of the Corporate Tax Act, has acquired stocks including those acquired prior to the merger, the liquidation income of the merged corporation is deemed to have been unjustly reduced due to such acquisition, not necessarily a subjective element, but a series of transactions and processes from the acquisition of stocks of the merged corporation to the merger (see, e.g., Supreme Court Decision 87Nu55, Jul. 25, 1989). In light of the circumstances and process of acquiring the stocks of the merged corporation, if the plaintiff paid KRW 351,145,342 in return for the merger without a method of merger after the acquisition of stocks of the non-party company, the liquidation income of the non-party company would be the amount calculated by deducting the paid capital from the transfer value of the stocks corresponding to the merger subsidy. Thus, it cannot be deemed that the liquidation income of the non-party company was unfairly reduced by the plaintiff, who is the merged corporation, by acquiring the stocks of the non-party company prior to the merger.

The court below's explanation to the same purport has reached the same conclusion, which does not affect the conclusion of the judgment, and there is no error in the misapprehension of legal principles as to calculation of liquidation income in the case of a merger. In the end, there is no argument about this issue.

2. We examine the grounds of appeal by the defendant litigation performer.

The court below held that Article 52-2 of the Corporate Tax Act provides that "the provisions of Article 41 (1) shall apply mutatis mutandis to liquidation income" with respect to additional tax and Article 41 (4) shall not apply mutatis mutandis with respect to the liquidation income of this case since Article 52-2 of the Corporate Tax Act provides that "the provisions of Article 41 (4) shall apply mutatis mutandis to liquidation income" and Article 41 (4) shall not apply mutatis mutandis with respect to additional

The discussion on this issue is groundless.

Therefore, each appeal shall be dismissed, and all costs of appeal shall be assessed against each losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Chang-chul (Presiding Justice)