Cho Jae-2017-China-3911 (Law No. 13, 2018)

There is no specific evidence of the repayment of the provisional payment, and therefore the transfer price of shares should be deemed the cost of stock transfer.

It is reasonable to see that the provisional payment of this case is part of the transfer value of the stocks of this case, and the plaintiff's assertion is insufficient to reverse it, and there is no other counter-proof, and

Article 94 (Scope of Capital Gains)

2018Gudan1705 Revocation of Disposition of Imposing Capital Gains Tax

IsaA

Cz superintendent of the tax office

December 2, 2019

on October 02, 2019

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 capital gains tax of KRW 288,216,320 to the Plaintiff on May 10, 2017 is revoked.

1. Details of the disposition;

A. Aaaa (hereinafter referred to as a “non-party company”) is a company established for the purpose of exhibition articles, model design, manufacturing and installation business, etc. The Plaintiff served as the representative director of the non-party company from September 12, 201 to May 17, 2004, and from May 21, 2004 to August 5, 201.

B. On May 12, 2011, between the Plaintiff, KimB, EB, LA, LA, and LAA, the shareholders of the non-party company, and between the KimB on May 12, 201, to the Co., Ltd., the representative director of the non-party company, the right of management of the non-party company, 20,000 shares of the non-party company (the plaintiff: 80,000 shares, KimB: 40,000 shares: 40,000 shares, SA: 40,000 shares, and 280,000,000 won for payment of the purchase price, and the balance of the non-party company shall be paid within six months from the date of conclusion of this contract, and the contract was concluded with the purchaser to pay the non-party company 2,40,000,000 won for the non-party company within six days from the date of conclusion of this contract (hereinafter referred to as the "transfer contract").

C. After November 2013, the Plaintiff, as the representative of the above transferor, entered into an agreement with KimB on the whole outstanding shares of the non-party company (200 million shares (40,000 shares: 80,000 won (hereinafter referred to as "the shares of this case")), KimB: 20,000 shares (20,000 shares, 40,0000 shares, and 20,000 won: 76,000,000 won, KimB shares: 38,000,000 won: 19,000,000 won: 38,000,000 won; 19,000,000 won: 38,000,000 won; 19,000,000 won; 281,281,000,000 won in total,000 won in total).

D. Around June 2014, KimB ratified the instant modified transfer agreement, and changed the payment date of KRW 100 million to June 2014, and changed the change of ownership of the shares acquired on or around July 2014.

E. On July 22, 2014, the Plaintiff reported and paid the transfer income tax to the Defendant by transferring the instant shares in KRW 760 million.

F. However, among the provisional payments of KRW 2.4 billion stated in the original transfer contract of this case, the Defendant deemed that the remaining Plaintiff’s provisional payments of KRW 2,122,707,350 (hereinafter “the provisional payments of this case”) were included in the transfer value of the instant shares, and on May 10, 2017, the Defendant corrected and notified the Plaintiff of KRW 288,216,320 (hereinafter “the instant disposition”).

G. The Plaintiff filed a request with the Tax Tribunal for a trial against X. 201X. X., but was dismissed on 201 X. XX.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 6, 9, 10, 11-1, 2, 12, Eul evidence 1, 2 and 3, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

It is reasonable to deem that the instant provisional payment was not included in the transfer value of the instant shares for the following reasons. Nevertheless, the instant disposition based on a different premise is unlawful.

1) The instant provisional payment is the money invested in Han River Development Project implemented by the non-party company for the benefit of the non-party company. The agreement between the non-party company and the Y208-2010-201-201-201-201-201-201-201-201-201-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-20-30-20-30-20-30-30-20-20-30-30

2) When KimB, as the actual representative director of the non-party company, was subject to criminal punishment for occupational breach of trust by allowing the non-party company to take over 2.4 billion won from the Chinese company located in XX (hereinafter referred to as "mae-electronic") located in the non-party company in question, KimB, which was established by KimB, the plaintiff and KimB did not state the provision that "the purchase price shall be changed to 1.9 billion won, and "the provisional payment shall be repaid to 2.4 billion won on the buyer's responsibility" when concluding the modified transfer contract in this case.

3) On July 8, 2011, KimB paid the provisional payment of KRW 2.4 billion to the non-party company, and immediately disposed of the provisional payment of KRW 2.4 billion on the account book, and returned the provisional payment of KRW 2.4 billion to the acquisition price of marina Electronic and returned it to the non-party company, and thus, the provisional payment against the non-party company was not substantially settled. The non-party company filed a claim for damages against the plaintiff for this reason. Ultimately, there is no reason to include the amount equivalent to the provisional payment in the transfer value of this case, and the legal effect of the provisional payment of this case was not attributed to the plaintiff, and thus, imposing capital gains tax by including the amount equivalent to the provisional payment of this case in the transfer value of this case was also contrary to the substance over form principle.

B. Determination

In light of the following facts acknowledged by the above facts and the evidence mentioned above, it is reasonable to view the provisional payment of this case as a part of the transfer value of the stocks of this case, and the statement in the evidence Nos. 7, 8, 13, and 14 alone is insufficient to reverse the above recognition and there is no other counter-proof. Thus, the plaintiff's assertion is without merit.

1) From January 1, 2011 to May 27, 2011, the non-party company paid approximately KRW 2.325 billion to the Plaintiff, and entered the provisional payment in the account books of the non-party company as the Plaintiff’s provisional payment on the instant provisional payment, and it is evident that the Plaintiff extinguished by having KimB pay the Plaintiff’s provisional payment to the non-party company through the conclusion of the instant original transfer contract.

It can not be viewed as a simple method of accounting settlement.

2) The Plaintiff asserted that the provisional payment of this case is only the amount of investment loss of the Han River Development Project of the non-party company, and there was no objective evidence to acknowledge it. However, the non-party company did not have asserted that the non-party company claimed against the Plaintiff that the non-party company had the non-party company acquired Ma-electronics with no asset value from KimB due to the Plaintiff's negligence in performing his duties as representative director, and had the non-party company acquired Ma-electronics with no asset value at 2.4 billion won from KimB until the case of 20 XX000 was sentenced to X. X. of 201X, the Plaintiff did not assert that the provisional payment of this case was not the actual provisional payment of the Plaintiff.

3) Although KimB paid 2.4 billion won to the non-party company including the instant provisional payment, it was immediately recovered as the acquisition price, however, after KimB thereafter, it was requested by the non-party company to pay the Plaintiff the amount equivalent to the instant provisional payment, and the non-party company did not recognize the validity of the instant provisional payment to the Plaintiff, and there was no claim by the non-party company. The non-party company merely claimed damages against the plaintiff that the non-party company had the non-party company take over 2.4 billion won of Ma-Electronic, which has no asset value from KimB because the plaintiff neglected his duties as representative director. Accordingly, it is still valid that KimB paid the instant provisional payment on behalf of the plaintiff to the non-party company.

4) The Plaintiff asserted that the appraised value of the non-party company’s asset valuation conducted on May 12, 201 is less than KRW 2.8 billion, and that the sale price of the shares sold by KimB to the non-party company on July 31, 2014, which was after the conclusion of the instant change transfer contract, was only KRW 2.37.6 million. KimB had no interest to pay a large amount of transfer price without exchange because it included the amount of the instant provisional payment. However, the appraisal base date of the report on stock valuation (Evidence 14) against the non-party company on April 30, 2010, there was a difference between the date of the instant transfer contract and the date of the instant transfer, and even if the report on stock valuation reflecteds the objective value of the shares, the sales price of the shares of the non-party company was determined by Kim Jong-B’s future value or the Kim-Utilization’s business feasibility, and the circumstances that the Plaintiff had already paid the shares to the non-party 1B, including the instant transfer price.

5) The Plaintiff asserted to the effect that “the instant provisional payment is not included in the transfer value of the instant shares,” since KimB did not state in the instant modified transfer contract the stipulation that “the instant provisional payment is responsible for and repaid the instant provisional payment,” but KimB already repaid the instant provisional payment on behalf of the Plaintiff to the non-party company on July 8, 2011, and any dispute over the validity of the instant provisional payment is not raised against the Plaintiff, the Plaintiff, the non-party company, and the non-party company, and the non-partyB, on whose behalf they do not dispute over the instant provisional payment, if the instant modified transfer contract states that “the content of the instant general contract excluding the change of the purchase price of shares is valid,” it is reasonable to deem that the content of the instant provisional payment remains effective as agreed upon in the previous original transfer contract, and there was no need to further state the content related to the provisional payment of which has already been terminated in the instant modified transfer contract.

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.