[1] Standard for interpreting tax laws and regulations

[2] The case holding that those who were determined to cultivate forfeited stocks arising from the waiver of preemptive rights by the existing shareholders shall be deemed to have received a donation equivalent to the difference between the actual value of stocks and the value of subscribed stocks, and thus the value deemed donated by applying the respective provisions of Article 34-5 (1) 1 of the former Inheritance Tax Act, Article 41-4 (1) of the Enforcement Decree of the same Act, and the formula of Article 5 (6) 1 (b) (2) of the Enforcement Decree of the same Act, and that the formula of Article 41-4 (2) of the same Enforcement Decree cannot be applied in a case where the forfeited stocks

[1] Under the principle of no taxation without law, or under the principle of no taxation without law, the interpretation of tax laws and regulations shall be based on the text of the law, barring special circumstances, and it shall not be allowed to expand, interpret or analogically without reasonable grounds.

[2] The case holding that the persons who received the resale price of forfeited stocks that occurred due to the waiver of preemptive rights by the existing shareholders shall be deemed to have received the donation equivalent to the difference between the actual price of stocks and the acceptance price, and thus, the value which is deemed donated by applying the formula of Article 41-4 (1) 1 (b) of the former Inheritance Tax Act (amended by Act No. 5193 of Dec. 30, 1996), Article 41-4 (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14862 of Dec. 30, 1995), and Article 5 (6) 1 (b) (2) of the Enforcement Decree of the same Act shall be calculated, and the formula of Article 41-4 (2) of the same Act cannot be applied to the case where the forfeited stocks are not once allocated

[1] Article 18 of the Framework Act on National Taxes / [2] Article 34-5 (1) 1 (a) of the former Inheritance Tax Act (amended by Act No. 5193 of Dec. 30, 1996), Article 5 (6) 1 (b) (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 14862 of Dec. 30, 1995), Article 41-4 (1) of the current Inheritance Tax and Gift Tax Act (see Article 29 (3) 1 (c) of the current Inheritance Tax and Gift Tax Act), Article 41-4 (2) of the Inheritance Tax and Gift Tax Act (see Article 29 (3) 2 of the current Inheritance Tax and Gift Tax Act)

[1] Supreme Court Decision 86Nu92 delivered on May 26, 1987 (Gong1987, 1079) Supreme Court Decision 89Nu7191 delivered on May 22, 1990 (Gong1990, 1392) Supreme Court Decision 90Nu9797 Delivered on July 9, 1991 (Gong1991, 2175), Supreme Court Decision 92Nu18603 delivered on February 22, 1994 (Gong194, 1123), Supreme Court Decision 95Nu7857 delivered on September 26, 199 (Gong195Ha, 354), Supreme Court Decision 200Du29708 delivered on March 27, 1998 (Gong2094, 2008Du320908 delivered on March 27, 2002).

Plaintiff 1 and one other (Law Firm Rate, Attorneys So-young et al., Counsel for the plaintiff-appellant)

Gangwon Tax Office et al.

Seoul High Court Decision 99Nu 16001 delivered on May 4, 2000

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

In light of the principle of no taxation without law, or the requirements for non-taxation or tax exemption, the interpretation of tax laws shall be in accordance with the law, barring special circumstances, and it shall not be allowed to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decisions 92Nu18603, Feb. 22, 1994; 200Du628, Mar. 24, 2000; 200Du10489, Jan. 25, 2002).

According to the reasoning of the judgment below, the court below rejected the following facts: (a) the above ○○○○○ Co., Ltd. (hereinafter referred to as “non-party company”)’s disposal of 60,00 won of 5,00 won of 00 won of 60% of 00 shares were newly issued on September 27, 1995; and (b) the existing shareholders renounced 68,447 shares; and (c) the above 152,00 shares were again allocated to Plaintiff 2 at their respective face value; (d) the Defendants deemed that the Plaintiffs received an allocation of forfeited shares of the non-party company and received an assignment of forfeited shares to the non-party company and received an assignment of 152,00 won of 9,70 won of 60 won of 60% of 196, and thus, (e) it violated the Enforcement Decree of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 196; hereinafter referred to as “the Act”).

Examining in light of the relevant statutes and the aforementioned legal principles, the above recognition and determination by the court below is just, and there is no error in the misapprehension of legal principles or the principle of no taxation without law as otherwise alleged in the ground of appeal in relation to the method of calculating the value deemed donation in the event of re-distribution of forfeited stocks. All of

Therefore, all appeals are 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.

Justices Lee Jin-hun (Presiding Justice)