Cho High Court Decision 201Do1342 (No. 26, 2011)

allocation by means of public offering of securities.

The board of directors passed a resolution to issue new shares only for 49 persons including the plaintiff, and accordingly the issuance of new shares does not constitute "distribution by the method of public offering of securities, which is an exception to the deemed donation due to the offering of new shares," and there is no data to deem that the issuance of new shares falls under the category of "distribution by the method of solicitation for subscription",

2011Revocation of revocation of disposition imposing gift tax, 1015

KimA

The head of Yangcheon Tax Office

April 6, 2012

April 27, 2012

1. All of the plaintiff's claims are dismissed.

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

Each disposition imposing gift tax on the Plaintiff on March 2, 2011 as listed in the separate sheet No. 1, which the Defendant rendered against the Plaintiff, shall be revoked.

1. Details of the disposition;

(a)BBro series Co., Ltd. (formerly changed, Co., Ltd., Ltd., Ltd., Inc., Ltd., hereinafter referred to as “Nonindicted Co., Ltd.”) (hereinafter referred to as “Nonindicted Co., Ltd.”) held a board of directors on April 10, 2007 and resolved to issue 49 shares issued by a third-party allotment method to total 49 members, including the Plaintiff, in a registered ordinary share of KRW 4,262, and 430 per share;

B. On May 4, 2007, the Plaintiff participated in the above capital increase with the acquisition of new shares 43,470 shares on May 4, 2007 and paid 000 won for the acquisition price on the same day, and the total of 49 shares acquired 4,261,394 shares, and paid 00 won in total.

C. As of May 3, 2007, as of May 3, 2007, the Defendant calculated the “value per share before the date of payment for shares,” the value of which was KRW 00,00, and the Plaintiff acquired new shares at a price lower than the market price. As a result, the Plaintiff deemed 00 won as a donation from the existing shareholders through the above capital increase for shares, and on March 2, 2011, the Plaintiff determined and notified the Plaintiff on March 2, 201 as shown in [Attachment 1] Article 39(1)1 (c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “former Inheritance Tax and Gift Tax Act”).

D. On March 25, 2011, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal, and the Tax Tribunal dismissed the Plaintiff’s appeal on August 26, 2011.

[Based on Recognition] The facts without dispute, Gap evidence 1 through 3, Eul evidence 4-1 to 8, Eul evidence 1 to 16, Eul evidence 1-3, and Eul evidence 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) In a case where Article 39(1) of the former Inheritance and Exchange Act provides that where new stocks are allocated by means of a public offering of new stocks pursuant to Article 2(3) of the former Securities and Exchange Act (amended by Act No. 8635, Aug. 3, 2007; hereinafter the same), the profits gained by being allocated at a price lower than the market price shall be excluded from the gift tax subject to gift tax; however, the defendant provided that the amount of profits gained by being allocated at a price lower than the market price shall be excluded from the gift tax subject to gift tax. However, if new stocks are allocated by a public offering, it is interpreted that

2) In calculating the capital increase profits pursuant to Article 29(3)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 23591, Feb. 2, 2012; hereinafter referred to as the "former Enforcement Decree of the Inheritance Tax and Gift Tax Act"), the Defendant calculated the "evaluation value per share before the capital increase as of the date of the public notice of the capital increase" by calculating the "evaluation value per share before the capital increase as of the date of payment of stock price" in violation of the principle of prohibition of retroactive taxation and Article 18(3) of the Framework Act on National Taxes that specify such principle.

3) Since Article 39(2) of the former Inheritance Tax and Gift Tax Act is premised on the establishment of a taxation unit by donor, the amount of gift tax should be calculated by each donor according to the share ownership ratio as of May 4, 2007, when the gift tax is imposed as of May 4, 2007, and the amount of gift by each donor based on the share ownership ratio as of May 4, 2007, however, the Defendant calculated the amount of gift by each donor based on the shareholder registry on December 31, 20

4) The Plaintiff acquired shares on a kind of rescission condition by concluding a new shares subscription contract with the non-party company on the condition of safeguard, and thus, the Plaintiff evaluated 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

5) As to the shares, which are prohibited from a transaction due to the safeguard, the average amount of the Korean Stock Exchange market price 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 is not considered as the market price of shares, and otherwise, the method of evaluating the shares, which are prohibited from a transaction due to the safeguard, was not prescribed under the former Inheritance Tax and Gift Tax Act, and the defendant assessed the shares acquired by the plaintiff and disposed of the

6) The Plaintiff calculated the “value per share before the capital increase” based on the date of the public notice of capital increase in the method of allocating third parties, and assessed the shares acquired by the Plaintiff as of the date of public notice of capital increase in accordance with the practices of national tax administration for potteries, and thus, the Plaintiff did not report and pay gift tax on the ground that there was a justifiable reason that it did not cause any negligence on the Plaintiff’s duty of care. Therefore, the penalty tax of this case

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Determination on the first argument

(a) Article 39 (1) of the former Inheritance Tax and Exchange Act provides that if a corporation issues new stocks at a lower price than their market price to increase its capital, such profits shall be calculated by adding the amount corresponding to such profits to the value of the donated stocks of the corporation concerned, and the former Enforcement Decree of the Securities and Exchange Act provides that such profits shall not be calculated by adding the value of the new stocks to the purchaser of the new stocks at a lower price than their market price under Article 2 (3) of the former Securities and Exchange Act. Article 2 (3) of the former Securities and Exchange Act provides that if the corporation purchases new stocks at a lower price than their market price under Article 39 (1) of the former Enforcement Decree for the purpose of issuing new stocks at a lower price than their new stocks at the time of issuance, the former Enforcement Decree shall be excluded from the issuance of new stocks at a lower price than that of the purchaser of the new stocks at a lower price than that of the purchaser of the new stocks at a lower price than that of the new stocks at a lower price than that of the purchaser of the new stocks at a lower price.

Furthermore, in order to constitute "distribution by the method of public offering of securities, which is an exception that does not include profits from the issue at a low price in the value of donated property" under Article 39 (1) 1 (c) of the former Inheritance Tax and Gift Tax Act, it should be limited to the procedures for soliciting subscription under Article 2-4 (5) of the former Enforcement Decree of the Securities and Exchange Act, i.e., advertising through newspapers, broadcasting, magazines, etc., the distribution of printed materials, such as notice and promotional leaflets, and electronic communications, etc., but it should not be limited to either issuing or selling securities or providing information on the acquisition of securities at least by using a similar or similar method. In addition, as the regulation target itself is changing and various economic phenomena, and the tax law carries out various economic policy purposes and social security purposes, the interpretation that takes into account the legal motive and purpose of the legislation, etc. should be permitted to the extent that it does not seriously undermine the legal stability and predictability that the taxation without the law aims, and the strict interpretation of Article 39 (1) 1 (c) of the former Inheritance Tax and Gift Tax Act cannot be construed strictly.

B) On April 10, 2007, the board of directors passed a resolution on the issuance of new shares only with respect to 49 persons including the plaintiff on April 10, 2007. Accordingly, the issuance of new shares can not be deemed as falling under the "distribution by the method of public offering of new shares", which is an exception to the constructive donation due to the offering of new shares as provided by Article 39 (1) 1 (c) of the former Inheritance Tax and Gift Tax Act. Moreover, there is no evidence to deem that the non-party company had undergone the procedure of soliciting the offer under Article 2-4 (5) of the former Enforcement Decree of the Securities and Exchange Act, and

2) Judgment on the second argument

A) As to the calculation of the gains deemed to have been donated at a low price under Article 39(1)1 (c) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, Article 29(3)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the calculation of profits under paragraph (3) of the same Article shall be made by multiplying the value obtained by subtracting the subscription price per share from [(the evaluation value per share prior to the increase of capital 】 (the total number of outstanding shares 】 the number of outstanding shares 】 the number of shares increased by the increase of capital 】 the number of new shares ＋ the number of shares increased by the increase of capital ] or (the number of shares increased by the increase of capital) ? (a) by the total number of outstanding shares before the increase of capital ? the number of forfeited shares issued before the increase of capital } by the number of new shares or the number of new shares allocated to the purchaser 90(3). In addition, the calculation of profits under Article 29(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be made based on the payment date of shares 90.

Meanwhile, the principle of retroactive taxation prohibition stipulated in Article 18(3) of the Framework Act on National Taxes applies only to cases where there are special circumstances where the protection of taxpayer's trust is deemed to conform to the justice even if it sacrifices the principle of legality, and the practice of national tax administration generally accepted by taxpayers under that provision refers to a wrongful practice, which is accepted by a general taxpayer who is not a specific taxpayer as just and it is not unreasonable for a taxpayer to trust such practice. The mere fact that a taxpayer has expressed a public opinion on the interpretation criteria of tax law cannot be seen as having been established, and the burden of proving such interpretation or practice is the taxpayer (see, e.g., Supreme Court Decisions 91Nu13670, Sept. 8, 1992; 2005Du2858, Jun. 29, 2006).

B) Under the formula of Article 29(3)1 through 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, with respect to this case, "the value per share before the person who issued a certificate" shall be the average value of the current value of the Korea Securities and Futures Exchange published by the day before the date when the increase in the capital occurred, and under the overall purport of the statement and arguments in subparagraph 3, it is recognized that it is reasonable for the Commissioner of the National Tax Service to regard the issue of the above basic rule as the date of publication of the fact as the date when the fact was announced. However, as seen above, since Article 29(4)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act of December 30, 202 provides that the calculation of profits under Article 29(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act of the same Act should be made based on the payment date of the shares, it is difficult to view that the above evaluation date per share should have been made on the basis of the administrative proof of the plaintiff's 2.

3) Judgment on the third argument

(a)a fact of recognition;

According to the overall purport of entry and pleading in Gap, Eul evidence 3, Eul evidence 7, Eul evidence 2, Eul evidence 4 through 7, and Eul evidence 1 through 4, and Eul evidence 9, the defendant seems to hold 200 billion won and 700 billion won of non-party company's total number of shares and 30 billion won of non-party company's total number of shares and 40.7 billion won of non-party company's shares and 70 billion won of non-party company's total number of shares and 30.7 billion won of non-party company's shares and 40.7 billion won of non-party company's shares and 40.7 billion won of non-party company's shares and 70 billion won of non-party company's shares and 30.7 billion won of non-party company's shares and 40.7 billion won of non-party company's shares and 70.4 billion won of non-party company's shares and 70.7

B) The Plaintiff, while the Defendant did not secure the list of shareholders as of May 4, 2007, the 200 shareholders of the non-party company, and the 200 shareholders owned 5% or more of the total number of shares issued by the non-party company as of December 31, 2006. The disposition of this case was unlawful as it did not reflect the changes in the shares of the non-party company, and the disposition of this case was in violation of the substance over form and the underlying taxation, and did not bear the burden of proof as to the taxation requirements. However, the above evidence and arguments are as follows: ① The non-party company’s existing shareholders were in a special relationship with the non-party company’s 20-2(1) and the non-party company’s shares were in excess of the 10-7 shareholders, and the non-party company’s shares were in excess of the 20-7 shareholders’ shares were in excess of the 20-7 shareholders’ shares issued by the non-party company, and the remaining 27G shareholders were in excess.27.

Therefore, the plaintiff's above assertion on different premise is without merit.

4) Judgment on the fourth argument

Article 65(1) of the former Inheritance Tax and Gift Tax Act provides that the term "Conditional Right" refers to the subsidiary officer of a legal act that enables the occurrence or extinction of the legal act to depend on the gender of an uncertain fact in the future. Therefore, the term "Conditional Right" refers to a right for which the fulfillment of the condition has not been confirmed, and one of the parties has the expectation or possibility to gain a certain benefit upon the fulfillment of the condition (see Article 149 of the Civil Act). In full view of the health stand in this case, the entire arguments are written in the items of Gap and Eul, and evidence Nos. 1 and 3 and 5, and the whole purport of the pleadings is taken into account, and 43,470 new shares of the non-party company that the plaintiff acquired on May 4, 2007 are protected by the Korea Securities Depository (the name of the Korea Securities Depository is changed to the Korea Securities Depository on February 2, 2008) for a period of four months after its issuance, and thus, this is merely limited to the disposition of the above new shares for a certain period between the plaintiff and this part.

5) Judgment on the fifth argument

Article 60(1) of the former Inheritance Tax and Gift Tax Act provides that the market value of listed shares shall be, in principle, the valuation of listed shares shall be based on the assessment method stipulated in Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act, and that the value assessed according to the assessment method stipulated in Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act shall be, in order to ensure objectivity and objectivity, considered as the market value. In full view of the system under Articles 60 and 63 of the former Inheritance Tax and Gift Tax Act as well as the above provisions, barring special circumstances, it is reasonable to view that only the average amount of the final market value at the Korea Stock Exchange is the market value of listed shares calculated on a daily basis before and after the assessment date calculated in accordance with the assessment method under Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act (see Supreme Court Decision 2008Du4770, Jan. 13, 2011).

6) Determination on the fifth argument

In order to facilitate the exercise of taxation rights and the realization of tax claims under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the Act, without justifiable grounds, the taxpayer’s intentional and negligent act does not constitute a justifiable reason that does not constitute a breach of duty (see, e.g., Supreme Court Decisions 9Du3515, Aug. 20, 199; 2002Du10780, Jun. 24, 2004). In this case, health care expenses, and common rules 39-292 of the former Inheritance Tax and Gift Tax Act, and 39-292 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, “in case of KOSDAQ-listed corporations, the appraised value per share before the date on which the taxpayer acquired rights.” However, it is difficult to accept the Plaintiff’s tax return based on the Plaintiff’s violation of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and the Plaintiff’s violation of the duty under Article 29(3) of the former Enforcement Decree of the Inheritance Tax Act.

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.