Appellate Court 2015Gu4604 ( December 14, 2015)

It is legitimate for a disposition that is imposed by applying the regulations on donation of profits from the transfer at a low price when acquiring shares from a person with a special relationship at a lower price than the evaluation price.

The disposition imposing gift tax by applying the regulations on donation of profits following low-price transfer to those acquired at low-price than the appraised value of shares from a person with a special relationship is legitimate.

Article 88 (Definition of Transfer) of Income Tax Act

Inheritance Tax and Gift Tax Act Article 35 (Donation of Profits from Transfer of Low Price and High Price)

2016Guhap20762 Revocation of Disposition of Imposition of Gift Tax

○ ○

○○ Head of tax office

July 6, 2016

August 12, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of gift tax of KRW 51,106,740 (including penalty tax) imposed on the Plaintiff on February 2, 2015 shall be revoked.

1. Details of the disposition;

A. On September 30, 2013, the Plaintiff entered into a contract for acquisition of shares of 1,613 common shares of ○○○○ Stock Company (hereinafter “○○○○○○”) (hereinafter “instant shares”) from 16,130,000 won, which is the Plaintiff’s death penalty, and thisA made a preliminary return of transfer income tax by taking the acquisition value and transfer value of 16,130,000 won on November 30, 2013 as KRW 16,130,000, respectively.

B. The Director of the AAA Tax Office, the Investigation Agency, evaluated the instant shares as a supplementary assessment method, applied the provision on donation of profits from a low-price transfer as prescribed in Article 35 of the Inheritance Tax and Gift Tax Act (23,804 won per week) and notified the Defendant, the disposition agency, by deeming that the Plaintiff was donated, of KRW 247,858,096, which is the amount obtained by subtracting 30% of the appraised value, from the appraised value (23,804 won per week). Accordingly, on February 2, 2015, the Defendant decided and notified the Plaintiff of KRW 51,106,740 (including additional taxes) of the gift tax on the gift donated as of September 30, 2013 (hereinafter referred to as the “instant disposition”).

C. On April 30, 2015, the Plaintiff appealed and filed an appeal on August 31, 2015. The Tax Tribunal dismissed the Plaintiff’s claim on December 14, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 11, Eul evidence Nos. 1 and 2 (including serial numbers, hereinafter the same), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff loaned money to thisA through thisB and thisCC. The loan granted through thisB was KRW 115,00,000,000 as of January 7, 1998; the loan granted through thisCC left KRW 130,00,000 as of May 28, 1998; the Plaintiff paid KRW 260,00,000 to B and thisCC on behalf of this on May 22, 1998; and the Plaintiff agreed that all of the above loans shall be paid for the benefit of interest.

2) On October 4, 2001, in order to secure the principal and interest of loans to thisA as above, the Plaintiff was established with a maximum debt amount of 2.3 billion won on real estate owned by thisA (hereinafter referred to as the “mortgage of this case”). On the 5th of the same month, the Plaintiff concluded a contract on payment in kind, which takes over 1,613 common shares of taxi owned by thisA every day pursuant to the ratio of the secured debt amount (Plaintiff 23/28, Kim○○○ 5/28) where the Plaintiff is unable to receive the secured debt of this case to the other secured debt of this case (hereinafter referred to as the “mortgage of this case”). On March 31, 201, the amount of the secured debt of this case was 261,77 won per share, and the total amount of the principal and interest of this case was 301,421,427,417,417, and the total amount of the secured debt of this case at the time of the establishment of this case.

3) On January 29, 2005, the Supreme Court confirmed the dismissal of the appeal by the Supreme Court, which became final and conclusive on January 29, 2005, and at that time the due date for reimbursement of the secured debt against the Plaintiff and Kim ○○○’s Lee. However, as the instant shares were not repaid, according to the instant payment payment contract, the instant shares were replaced by the payment of each claim of KRW 348,871,130 (1,081 shares) to the Plaintiff as of March 31, 2005, and the instant shares were replaced by the payment of each claim of KRW 171,692,360 (532 shares) to the Plaintiff. On the same day, Kim ○ transferred the instant 532 shares to the Plaintiff, and the ownership of the instant shares was entirely attributed to the Plaintiff, but the Plaintiff immediately transferred the instant shares to the Plaintiff.

4) Next, the Plaintiff shall return the instant shares held in title trust by thisA to the Plaintiff’s name, and as a consequence, the Plaintiff’s failure to return the instant shares held in title trust by thisA, and around September 30, 2013, the instant shares from this time.

As you acquire par value 10,000 won, we prepare a stock acquisition agreement formally and complete a change of entry.

5) Therefore, the Defendant’s acquisition of shares on September 30, 2013, which was the basis of the instant disposition, and the transfer of ownership pursuant thereto, were ultimately restored to the Plaintiff’s name on the instant shares, and thus, the instant disposition issued under the premise that it is a real transaction and transfer is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) On May 20, 2003, the Plaintiff, EA, and EA, Kim ○○, were notarized by a notary public on May 20, 2003 on the shares acquisition agreement of 1434, 2003 at the Sung-dong Law Office (hereinafter “instant payment contract”). The main contents are as follows. On the other hand, the above contract does not stipulate specific provisions on the amount of claims to be extinguished due to the repayment of double debt against the Plaintiff and Kim ○○, the date of stock transfer, and payment in kind.

4. Goods: 1,613 shares in double-owned shares of taxi stock companies every day;

In taking over the above shares, the transferor shall enter into a contract with "A", "A", "C purchaser Kim ○, and "B" on the following terms:

1. “A” shall order “B” without delay to own the stocks, if the principal and interest created on the property of “A” is unable to be repaid;

2. The term "B" shall consent to the operation of the company under the responsibility of "A" until a case in progress where the assets of the company A currently in auction are distributed and the lawsuit is in progress;

3. If the shares of “A” are raised to cover liabilities, consent shall be given to the transfer to “the same degree of faulted shares which are the spouse”;

2) On June 1, 2001, the Daegu District Court 2001Hu3484 regarding the 15 parcels of real estate owned by thisA commenced a compulsory auction on the said real estate on October 26, 2001. On October 26, 2001, on the said real estate, 60 million won, including the establishment registration of a new maximum debt amount of 4 billion won in the name of the Plaintiff, including the establishment registration of a new mortgage over the instant real estate under the name of the Plaintiff, the establishment registration of a new mortgage over the instant real estate under the name of 4 persons, including the establishment registration of a new maximum debt amount of 4 billion won, and the establishment registration of

3) The instant case of demurrer against the distribution (Seoul District Court Branch Decision 2002Gahap721) was prepared by the auction court in the said auction case on the grounds that the said six collateral security rights were both based on false collateral security claims, and the said judgment was finalized on January 28, 2005 as it became final and conclusive on the grounds that the said six collateral security rights were all excluded from dividends (the remaining five persons, including the plaintiff, etc., did not object to the distribution). In the instant case, the instant judgment: (a) although the said six persons, including the plaintiff, were deemed to have actually secured claims; (b) however, the said court rendered a judgment dismissing the claims of D while rendering a judgment on August 8, 2003 as follows; and (c) both the appeal and final appeal of D were dismissed, and the said judgment became final and conclusive on January 28, 2005.

In light of the fact that there is no evidence to support that loans were actually received and each collateral was established as a collateral between thisA and ED, the time and circumstances for each establishment of a collateral, the maximum amount of claims is the larger amount between the market price of the land owned by thisA and the market price of the land owned by this Act, the relationship between IsD, etc., and the relationship between IsD, etc., the establishment of a collateral on the same day, and the fact that Dodd as the person who created a collateral on the same land was the person who created a collateral on the same day, it is reasonable to deem that the establishment of a collateral on each of the instant lands was established on the basis of the false or fictitious collateral for the purpose of preventing the successful bid price for each of

[Ground of recognition] Facts without dispute, Gap evidence Nos. 5, 6, 7, Eul evidence Nos. 3 and 4, the purport of the whole pleadings

D. Determination

1) The following circumstances revealed in light of the facts acknowledged earlier and the purport of the entire pleadings

In full view of the foregoing, the Plaintiff’s assertion that the Plaintiff entered into a payment contract in lieu of the existing loan claim against thisA as of October 5, 2001, and that the Plaintiff acquired the ownership of the instant shares on or around March 2005, which was around the time when the lawsuit of demurrer against the distribution was concluded, was too rare, and thus, it cannot be deemed that the credibility of the claim is too rare.

① From August 18, 1994 to May 28, 1998, the Plaintiff asserted that the Plaintiff lent KRW 579,000,000 to business funds four times, and that the amount of the claim, including interest, reaches KRW 1,743,145,10, including interest, but did not receive all principal and interest, and concluded the payment contract in this case. However, in the instant case of demurrer to distribution, the Plaintiff asserted that the legal brief prepared and submitted by the legal representative of DoD was stated only in the legal brief prepared and submitted, and there is no objective evidence, such as financial account transaction, etc. to recognize the existence of the loan claims. In addition, at the time of the relevant case of demurrer to distribution, the Plaintiff’s loan claim in EA was judged to be false, and such judgment was maintained in the appellate trial and the final appeal, and it was finalized as is.

② There is no agreement on specific matters, such as the principal and interest payment period, the date of stock transfer, and the amount of claims to be extinguished due to payment in kind, in the instant payment in substitutes contract, and there is no ground to regard the time when the Plaintiff ends the case of demurrer against distribution as proposed by the Plaintiff.

In addition, in light of the timing and contents of preparation, it is highly probable that it was prepared falsely to use it as favorable evidence in the related Demurrer case.

③ The Plaintiff and ○○○○○○’s claim against the Plaintiff, which was terminated by the instant accord and satisfaction contract, against approximately KRW 2.8 billion. The equivalent value of the instant shares is merely KRW 422,246,301 per share, even according to the Plaintiff’s assertion. Nevertheless, the Plaintiff and ○○○ did not have to demand the transfer of shares of this case’s spouse and ○○○○○ pursuant to the provisions of paragraph (3) of the instant share acquisition agreement, and ○○ transferred the shares to the Plaintiff without compensation (the Plaintiff alleged that the Plaintiff would pay KRW 170,000,000 to KRW 532 shares at the time of the sale of the shares after the Plaintiff’s offering of the shares after the purchase of the shares. However, it is difficult to believe that ○○○ transferred the shares to the Plaintiff without compensation due to the payment of the shares paid to the Plaintiff under this case’s claim against this case, and the Plaintiff’s transfer of shares under the name of the obligor, a tradeal transfer agent.

2) If so, the Plaintiff is deemed to have acquired the shares of this case from thisA through a contract for acquisition of shares on September 30, 2013. Thus, the instant disposition imposing gift tax pursuant to the relevant Acts and subordinate statutes is lawful by deeming it as a low-price transfer, and the Plaintiff’s assertion disputing this is groundless.

3. Conclusion

The plaintiff's claim is without merit, and it is dismissed. It is so decided as per Disposition.