Busan High Court 2012Nu1549 ( October 29, 2012)

Whether exemption from the imposition of the penalty tax of this case was justifiable or not

It is reasonable to impose penalty tax on this case because it is difficult to view that there is a justifiable reason for not fulfilling the duty to pay gift tax.

Article 41-3 (6) of the Inheritance Tax and Gift Tax Act

2012Du25187 Revocation of Disposition of Imposition of Gift Tax

IsaA

Head of Eastern Tax Office

Busan High Court Decision 2012Nu1549 Decided October 19, 2012

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 41-3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 916, Jan. 1, 2010; hereinafter "former Inheritance Tax and Gift Tax Act") provides that "where a person in a special relationship with a person falling under any of the following subparagraphs who is in a position to use information not disclosed to the management, etc. of a company (hereinafter "large stockholder, etc.") receives or acquires stocks or equity shares of the relevant corporation (hereinafter "stocks, etc.") from the largest stockholder, etc. for consideration, the date of donation or acquisition, and where such person acquires stocks, etc. of the relevant corporation from a person other than the largest stockholder, etc. with donated property, etc., he/she shall hold not less than 20 percent of the total number of issued stocks or equity shares of the relevant corporation under the former Inheritance Tax and Gift Tax Act within five years from the date of acquisition (referring to those listed on the securities market or the KOSDAQ) and obtains profits above the standard prescribed by Presidential Decree, the person who owns not less than 20 percent of the total number of issued stocks or equity shares of the relevant corporation and not less than 20 percent prescribed by Presidential Decree":

Article 41-3 of the former Inheritance Tax and Gift Tax Act was enacted for the purpose of enabling the largest shareholder, etc. to obtain large market value marginal profits from the listing of the ○ Securities and Futures Association or the registration of the ○ Securities Business Association by using internal information of the company, by transferring stocks to his/her children, etc., or continuously holding the outstanding stocks without transfer by the donee or acquisitor, and thereby regulating the problem of controlling affiliated companies without tax burden (see Supreme Court Decision 2010Du11559, May 10, 201). Under Article 41-3 of the former Inheritance Tax and Gift Tax Act, the ownership of stocks by the largest shareholder, etc. of the 25/100 or more of the total number of stocks owned by his/her relatives, etc. can be determined by the former Enforcement Decree without limiting the scope of shares owned by 10/10 or more to 25/100 of the former Inheritance Tax and Gift Tax Act and Article 41-3(1)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, etc.

According to the reasoning of the judgment below, ○○○○ Co., Ltd. (hereinafter “○○○ Co., Ltd.”) owned 10% of the total issued shares of ○○ Co., Ltd. (hereinafter “○○○ Co., Ltd.”) and ○○○ Co., Ltd. (hereinafter “○○ Co., Ltd.”) owned 10% of the total issued shares of ○○ Co., Ltd at the time of donation of the original

Examining these facts in light of the legal principles as seen earlier, the lower court’s determination that ○○○ constituted the largest shareholder, etc. under Article 41-3(1)2 of the former Inheritance Tax and Gift Tax Act is justifiable. In so doing, the lower court did not err by misapprehending the legal doctrine regarding the scope of the largest shareholder, etc. under Article 41-3(1) of the former Inheritance Tax and Gift Tax Act, or by failing to exhaust all necessary deliberations.

2. As to the grounds of appeal Nos. 2 and 3

Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act provides that "in the application of the provisions of paragraph (1), the acquisition of stocks, etc. shall include new stocks acquired and allocated by the corporation through the issuance of new stocks in order to increase its capital (including the amount of investments)".

The purport of imposing the gift tax on the listed profits of the unlisted stocks under Article 41-3(1) of the former Inheritance Tax and Gift Tax Act is to promote tax equality by imposing the gift tax on the transfer of the transferred property predicted at the time of donation or transfer. As such, the “new stocks” under Article 41-3(6) of the former Inheritance Tax and Gift Tax Act shall be deemed to include not only the free new stocks based on the stocks that were donated or acquired by the

According to the records, the Plaintiff acquired 30,000 shares of 0,000 shares (hereinafter “instant shares”) totaling 10,000 shares of 10,000 shares, each time of capital increase issued by ○○○○○ Co., Ltd. based on the initial shares issued by ○○○○ Co., Ltd for each three occasions.

Examining these facts in light of the legal principles as seen earlier, the lower court’s determination is justifiable that the listed marginal profit of the instant shares is subject to the gift tax under Article 41-3(6) of the former Inheritance Tax and Gift Tax Act. In so doing, the lower court did not err by misapprehending the legal doctrine on the scope of application under Article 41-3(6) of the former Inheritance Tax and Gift Tax Act

3. As to the grounds of appeal Nos. 4 and 5

In order to facilitate the exercise of taxation rights and the realization of tax claims under the tax law, a taxpayer’s intentional or negligent act is an administrative sanction imposed in accordance with the law in cases where a taxpayer violates a tax return and tax liability as prescribed by the law without justifiable grounds, and the taxpayer’s intentional or negligent act does not constitute a justifiable reason. In addition, even if a taxpayer believed a tax official’s erroneous explanation and fails to perform his/her duty to report and pay taxes, if it is evident that such failure is contrary to the relevant law, such reason alone does not constitute a justifiable reason (see Supreme Court Decision 2003Du10350, Sept. 24, 2004).

In light of the language and text of Article 41-3(6) of the former Inheritance Tax and Gift Tax Act, it is difficult to see that there is difficulty or doubt as to the interpretation that Article 41-3(6) of the former Inheritance Tax and Gift Tax Act applies to new stocks for consideration in light of the following: (a) the National Tax Service’s tax officials affiliated with the Busan Regional Tax Office conducted a tax investigation on ○○ Scoco from August 10, 2009 to September 30, 2009, deeming that the listing gains of the newly issued stocks are subject to gift tax; (b) although it was determined that the listing gains of the first case were subject to the imposition of gift tax without confirming the aforementioned taxation cases, it is difficult to see that there was no justifiable reason for the Plaintiff to be exempted from the listing gains of the new stocks for consideration by changing the initial view of the taxation cases as above, omitting the taxation gains of the new stocks for consideration, and then, the Defendant did not have any legitimate reason for notifying the Plaintiff of the gift tax for consideration marginal profits or for consideration.

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench. While examining all the judgment and the appellate brief and the records of this case, the argument on the grounds of appeal by the appellant is not included in the grounds provided for in each subparagraph of Article 4(1) of the Act on Special Cases Concerning the Procedure for Appeal, and it is recognized that there is no reason or reason. Therefore, the appeal is dismissed in accordance with