Busan District Court 2016Guhap514 (2016.17)

It is an act of allocating abnormal profits with economic rationality in the light of sound social norms or commercial practices.

In light of sound social norms and commercial practices, abnormal profits with low economic rationality are distributed, and the act of reducing corporate tax burden is deemed to constitute wrongful calculation under Article 88 of the Enforcement Decree of the Corporate Tax Act.

Article 88 of the Enforcement Decree of the Corporate Tax Act [Type of Wrongful Calculation]

2016Nu21862 Revocation of Disposition of Imposing corporate tax, etc.

A Stock Company

B The Director of the Tax Office

Busan District Court Decision 2016Guhap514 Decided June 17, 2016

November 23, 2016

January 25, 2017

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

the Gu Office's place and place of action

1. Purport of claim

Income of KRW 000,000,000, which the Defendant transferred to the Plaintiff on March 1, 2015, to C.

Notice of change in amount and disposition of imposition of KRW 00,00,000 for corporate tax of March 4, 2015 shall be revoked in all.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

A. On July 27, 2009, Dgres Co., Ltd. purchased 20,000,000 shares of F Co., Ltd. (hereinafter “Dgres”) from E Co., Ltd. (hereinafter “Dgres”) for KRW 20,00 per share of 20,00 shares of E Co., Ltd. (hereinafter “instant shares”) from E Co., Ltd., and purchased from E Co., Ltd. for 20,000 won per share of 20,00 shares of E Co., Ltd. (hereinafter “instant shares”), from the date one year has elapsed from the date of transaction to the date of company disclosure, from the date one year has passed from the date of transaction completion; the exercising price per share was the total amount of 13% shares from the date of purchase to the date of annual purchase of shares; or on November 23, 2010, the Plaintiff purchased the instant shares from Dgres to 300,000 won per share, 3000 won per share.

C. From January 13, 2014 to February 25, 2014, the △△△△ regional tax office conducted a survey on stock fluctuation, and notified the Plaintiff of KRW 00,000,000 as interest expense for KRW 00,000,000 on the ground that the Plaintiff performed the duty of put options in place, instead of performing put options, and paid the amount equivalent to the interest amount to D Capital Capital.

D. After the Board of Audit and Inspection conducted an audit from September 15, 2014 to October 2, 2014, the Board of Audit and Inspection issued a request to correct the difference of KRW 00,518 per share by acquiring the instant shares of KRW 20,000 per share in KRW 23,518 per share, thereby acquiring them more than KRW 3,518 per share. Accordingly, the Board of Audit and Inspection issued a request to rectify the wrongful calculation of KRW 00,000,000, and accordingly, to dispose of the said shares to C.

E. On March 1, 2015, the Defendant notified the Plaintiff of the change in the amount of income of KRW 000,000,000, which was the person to whom C reverts, as a result of the Board of Audit and Inspection’s demand, and notified the Plaintiff of the correction and notification of KRW 00,000,000 for the business year 2013 (hereinafter “instant disposition”).

F. The Plaintiff filed a request for tax adjudication on April 3, 2015, but was dismissed on December 2, 2015.

[Ground of Recognition] Facts without dispute, Gap evidence 1 to 5, Eul evidence 1 to 3 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant transaction is based on a share sales contract that is commonly used by a financial institution and an enterprise, and cannot be deemed as lacking economic rationality in light of sound social norms and commercial practices. Moreover, even if the Plaintiff and D Capital have not been specially related, thereby obtaining economic benefits, the instant transaction does not fall under the subject of the avoidance of wrongful calculation.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The process of entering into put options contracts and of exercising put options

A) On July 27, 2009, D Capital purchased the shares of the instant company from E in KRW 20,000 per share, and entered into a contract for sales of shares with the following contents to determine E and C as an obligor to put in place put in place options and/or place options to those related parties to E and the instant company:

A sales contract of stocks shall be a sales contract.

Article 1 Trading of Stocks

(1) Pursuant to this Agreement, the seller sells to investors 200,000 registered ordinary shares (10,000 per share value, 6.65% of shares) of its holding company, and the investor purchases such shares.

(2) The purchase amount shall be KRW 200,000 per share, a sum of KRW 0 billion.

Article 16. put options

(1) General put options

(a) The investor may, at his option, request the seller to purchase all or part of the company’s shares, including the shares purchased from the seller in accordance with Article 1. In this case, the person who is obligated to place put to place to place to place to place to place to place to place to place to place to place to place to place to place to place to order must purchase the shares. The investor’s period of time to place to place to place to place to place

(b) Omitted

(c) The request for purchase of shares of the company under subsection (a) shall be made with a document stating the price and quantity of the shares to be purchased, and the sales contract for the shares shall be concluded at the time when the request for purchase is delivered to the person who is responsible for put to place to place to place to place to place to place to place to place to place to place to place to place to place to place to place to place to place to place to

(d) In the purchase of shares under subsection (a), the sales price per share shall be the sum of the sales price per share under this contract and the amount calculated by applying the ratio of 13 percent per annum from the date of the closing of transaction to the date of the purchase of shares subject to put options under subsection (c) of this section.

(e) In the event that an investor makes a request for stock purchase to a person responsible for put options pursuant to subparagraph (a), the person responsible for put options may designate a third party (including a company where legal permission is granted) and allow the third party to purchase the pertinent shares. In this case, the third party purchaser to put options shall be jointly and severally liable to put options.

B) Details of reply to Dogl's response on the process of exercising put options

1. Details of details of transactions of purchase and transfer of stocks;

The decision of investment will will be made based on the expectation of growth, such as E(State) shares 175,00 shares, which are drafted as security for expansion of sales through new products of Dong company at the time of investment and the implementation of put options.

2. All of the documents related to the exercise of put options when transferring stocks (related public questions, etc.);

Pursuant to the terms and conditions that were initially approved at the time of initial acceptance, put put options shall be put into place after determining the use of put options at the end of 2010 and after internal approval is obtained (the contact with the buyer without sending separate public notices from the buyer).

3. Grounds for change to a plaintiff, not C, the purchaser is the person responsible for put put in place options;

In the first place of put options, the first place of put option requested the buyer to change the buyer on the ship, and the simple purchase party's change, which is not a change in the terms of purchase, is non-discriminatory in terms of the recovery of our investment, so it

C) The Plaintiff’s internal resolution at the time of exercising put options

Minutes of the Board of Directors

Agenda: Cases of acquisition of F shares

The representative director explained the current structure of the F, which is the affiliate of the us, and recently, the F, increased its capital, has decreased to 41.68%, and explained that there is a problem in stable management activities by increasing the shares of external investors, and explained the necessity for the acquisition of shares by the representative director and the plaintiff.In recent years, new banks and Dgrasa explained that there is a burden for the long-term holding of the shares of the non-listed company as non-profit assets in the long-term holding of the shares of the non-profit assets, and actively reviewed the intention of purchase. As a result of explaining that the board of directors has been held today, it is reasonable to maintain the F's shares at least 50% of the stable management right level, and all directors agreed that the F's shares should be maintained at least 50% of the total amount of the shares of the company, as the amount required by the new bank and Dgrasa shall be the principal and interest preserved amount, and all directors signed and sealed to the representative director on the specific matters.

2) The transaction status of the shares of the instant company before and after the instant transaction

3) Whether the instant company was listed after the instant transaction

Since November 23, 2010, the date of the instant transaction, the instant company took measures to divide shares for listing in 2013, and was listed on the KOSDAQ around July 2014.

[Ground of recognition] Unsatisfy, Gap evidence Nos. 3, 5, 7, Eul evidence Nos. 3 through 7, and fact-finding with FF corporation of this Court, the purport of the whole pleadings

D. Determination

1) "Calculation of wrongful acts" means the calculation of an act to reduce or eliminate the tax burden incurred when a taxpayer takes a round-out, multi-stage act and other abnormal transaction form without a reasonable economic person's reasonable transaction form. Article 52 of the Corporate Tax Act provides for the denial of wrongful acts and calculation method under Article 88 (1) of the Enforcement Decree of the Corporate Tax Act. The purpose of the calculation method and calculation is to disregard the economic rationality by abusing all types of transaction forms with a corporation and related parties under the circumstances under the circumstances of Article 8 (1) of the Enforcement Decree of the Corporate Tax Act, and to ensure fair taxation and to prevent tax avoidance by deeming that the taxation authority has objectively reasonable income in terms of tax law. Article 88 (1) of the above Enforcement Decree provides for the individual and specific type of act under subparagraphs 1 through 8 of the above Article 10 where a taxpayer reduces the tax burden, and subparagraph 9 of the above Article 20 provides for "any other act equivalent to the acts under subparagraphs 1 through 8 or the act with a special relation at the same time as an ordinary transaction price is not deemed reasonable.

2) In full view of the following circumstances revealed in the facts acknowledged in the instant case: (a) although the representative director C in a special relationship with the Plaintiff should purchase the instant shares at a higher price, it is reasonable to deem the Plaintiff’s purchase of the instant shares at a higher price by allocating abnormal profits with economic rationality in light of sound social norms and commercial practices, and reducing the Plaintiff’s corporate tax burden. Therefore, the Plaintiff’s above act is equivalent to Article 88(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 26981, Feb. 12, 2016) (amended by Presidential Decree No. 26981, Feb. 12, 2016), and is deemed to be subject to the avoidance of wrongful calculation, as it falls under “the profit-sharing ratio as stipulated in Article 88(1)9 of the former Enforcement Decree of the Corporate Tax Act.” The Plaintiff’s assertion is without merit.

A) As to the specific details of the transaction of this case, it is difficult to deem that the management right of this case was not maintained in light of the fact that: (a) D Capital set the transaction price of put options based on the contract on July 27, 2009; (b) changed only the purchaser from C to the Plaintiff at the request of C; and (c) it is difficult to view the same as ordinary transaction because the Plaintiff’s minutes of the Plaintiff’s board of directors at the time of the transaction of this case were due to the delay in listing unlisted stocks in the new bank and D Capital; and (c) it was necessary to purchase put options at a higher price than the market price at the time; (c) it is difficult to view that the Plaintiff would not have any significant need to maintain the management right of this case in light of the fact that the Plaintiff would have been able to put stocks at the market price of this case, and that the Plaintiff would have been able to buy stocks at a higher price than the market price of this case in light of the fact that the Plaintiff would have been able to buy stocks at the market price of this case.

B) As to whether the transaction of this case can be seen as the market price of put options at the time of the transaction, ① the transaction of this case is the exercise of put options, and the transaction between the new bank and C is also the exercise of put options at the same time, which is the amount calculated at the rate of 13% per annum from July 27, 2009, much prior to the transaction date of this case to the purchase date to be more than the transaction date of this case, and it is expected that the transaction of this case is the total amount of put options at the rate of 13% per annum from July 27, 2009 to the purchase date, it is difficult to view it as the generally traded price with many and unspecified persons on the day of the exchange or a third party who is not a specially related party. ② Even if the stock of this case was not listed at the time of the transaction, and there was no transaction between the third party except for the specially related parties, it is difficult to view it as the market price of this case to be more than the market price of the non-listed stock of this case.

C) The Plaintiff asserted that the sales of the instant company were rapidly increasing at the time, and that it could have been aware of the possibility of stock price increase due to imminent listing. However, in fact, the Plaintiff’s assertion is difficult to accept in light of the following: (a) the listed company on the KOSDAQ was subsequent to the lapse of three years and seven months from November 23, 2010, which was the date of the instant transaction; (b) it is difficult to view that it was imminent to list solely on the grounds that the sales have rapidly increased; and (c) the circumstances that the instant company had prepared or prepared for listing as a prior measure to list the KOSDAQ, such as share swap, are not separately spreading.

D) In addition, the Plaintiff asserted that the instant transaction was a justifiable transaction based on the 2016 ○○○○○○ decision that revoked taxation disposition regarding the transaction between the new bank and C on the same day as the instant transaction. However, the transaction between the new bank and C was based on the self-investment decision of the new bank as the transaction between the new bank and a non-related party, while the transaction between the new bank and C was based on the transaction between the new bank and a non-related party, the instant transaction was in fact distributed profits to C, which is a related party, instead of performing C’s obligations, and is separate from the purport and factual relations of the said

3. Conclusion

If so, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance shall conclude this conclusion.

Since it is unfair, the judgment of the first instance is revoked and the plaintiff's claim is dismissed.