Suwon District Court 201Guhap3594 (No. 12, 2012)

The appraised value per share before the capital increase shall be based on the payment date of stock price.

(As with the judgment of the first instance court), the board of directors passed a resolution to issue new shares and the issuance of new shares accordingly cannot be deemed as falling under the allotment by the method of offering securities, which is an exception to deemed donation due to capital increase. As long as there was explicit provision that the assessment value per share before the capital increase is based on the payment date of stocks, it is difficult to deem that the practice of national tax administration was established on the basis of the

2012Nu27093 Revocation of Disposition of Imposition of Gift Tax

IsaA

port of origin

Suwon District Court Decision 201Guhap3594 Decided July 12, 2012

January 16, 2013

February 6, 2013

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The imposition of each gift tax on March 1, 201 by the Defendant to the Plaintiff on March 1, 201 shall be revoked.

1. The part citing the judgment of the court of first instance

The reasons for the judgment of this court are as follows: (a) the plaintiff added a new judgment on the argument that this court had newly made in this court; (b) the relevant part is cited in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Judgment on the plaintiff's assertion

A. The plaintiff's assertion

1) The Plaintiff acquired shares on condition of rescission by concluding a new shares subscription contract with the non-party company on condition of safeguard, and thus, the Plaintiff assessed shares acquired by the Plaintiff under Article 65 of the former Inheritance Tax and Gift Tax Act, and the Defendant assessed shares acquired by the Plaintiff under Article 63 of the former Inheritance Tax and Gift Tax Act.

2) As to the shares, which are prohibited from a transaction due to the safeguard, the average amount of the Korean Stock Exchange’s market price, which was published for two months before and after the date of acquisition of shares under Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act, shall not be considered as the market price of shares, and otherwise, the method of evaluating the shares, the sale of which is prohibited due to the safeguard deposit, was not prescribed in the former Inheritance Tax and Gift Tax Act, and the Defendant assessed the shares

B. Determination

1) Determination on the first argument

Article 65(1) of the former Inheritance Tax and Gift Tax Act provides that the term "Conditional Right" refers to a right for which the validity or extinction of a legal act depends on the gender of an uncertain fact in the future. Therefore, the term "Conditional Right" refers to a right for which the fulfillment of a condition has not been confirmed and which is expected or possible to gain a certain benefit due to the fulfillment of a condition by one of the parties (see Article 1149 of the Civil Act). According to both consensus and statements in subparagraphs A and 3, and 5, the new shares of a non-party company acquired on May 4, 2007, which were 121.70 shares of the non-party company acquired on May 4, 2007, can be recognized as being protected by the Korea Securities Depository (title change to the name of the Korea Securities Depository on February 2, 2008). This is merely limited to the disposition of the new shares for a certain period under an agreement between the plaintiff and the non-party company, and thus, it cannot be viewed as a right under Article 65(1) of the former Inheritance Tax Act.

2) Judgment on the second argument

In principle, Article 60(1) of the former Inheritance Tax and Gift Tax Act provides that the value assessed by the method of evaluation under Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act shall be considered as the market price in order to exclude arbitraryness in evaluation, and to ensure objectivity, and in full view of the system and its contents under Articles 60 and 63 of the former Inheritance Tax and Gift Tax Act on the method of evaluation of stocks above, barring any special circumstance, it is reasonable to view that only the average amount of the market price at the Korea Stock Exchange calculated on a daily basis before and after the evaluation base date calculated in accordance with the method of Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act is deemed as the market price for the stocks acquired by the Plaintiff under Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act (see Supreme Court Decision 2008Du470, Jan. 13, 201). In this case, the Plaintiff’s calculation of the market price before the issuance of new stocks by the Plaintiff is not deemed as the market price.

3. Conclusion

The judgment of the first instance is justifiable. The plaintiff's appeal is dismissed.