Whether the market price is recognized at the time of transaction with a person with a special relationship;

The market price per share of the shares of this case is not KRW 9,900,000, the closing price of the Association Brokerage Market immediately before the trading day, but KRW 11,938,00,00,00,000,000,000,000,000,000,000 won per share for 2 months before and after the transfer

Article 101 of the Income Tax Act (Unfair Act and Calculation of Transfer Income)

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 652,812,170 for the Plaintiff on March 2, 2005 shall be revoked.

1. Details of the disposition;

A. Of the shares of ○○○○, a listed company registered with the Association (i.e., KOSDAQ-registered company), ○○ (hereinafter referred to as the “instant company”). 2,08,940 shares, 18.2% of the total issued shares, the Plaintiff owned 30.01% shares as representative director, and as the largest shareholder, the Plaintiff owned 15.8% of the total issued shares of the instant company, and the foreign fund company owned 19.5% of the total issued shares of 19.5% (i.e., 34% of the shares of the Plaintiff and ○○○, Inc., the largest shareholder of the instant company), the Plaintiff transferred 2,08,940 shares to ○○○, Inc. (hereinafter referred to as the “○○, etc.”) through the scheduled return of shares (hereinafter referred to as “the instant shares transfer price of the instant case”) and the transfer price of the instant shares to ○○, Inc. (hereinafter referred to as “the instant transfer price of shares”).

B. Accordingly, the transfer price of this case cannot be deemed as the market price per share under Article 60(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter the same shall apply). The market price per share under Article 60(1) of the former Inheritance Tax and Gift Tax Act shall be deemed as the market price. The transfer price per share of the shares of this case shall be 11,938 won calculated by adding the average amount of 9,949 won to 20% of the Korea Stock Exchange for 2 months before and after the base date of appraisal, which is calculated under Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act and Article 60(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 200; hereinafter the same shall apply. 200 won before and after the base date of appraisal, 200 won or less, 3014.

[Recognition] Facts without dispute, Gap evidence 1-1, each entry of Eul evidence 1-1, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Article 63(1)1 of the former Inheritance Tax and Gift Tax Act applies only to the supplementary assessment method applicable only to the case where it is difficult to calculate the market price under Article 60(1) of the former Inheritance Tax and Gift Tax Act as of the evaluation base date. In the transfer of the shares of this case, the transfer price of this case is the closing price of the Association Brokerage Market as of the day immediately preceding the transaction date, and its price is an objective exchange price formed through a normal transaction between many and unspecified persons, which corresponds to the market price under Article 60(1) of the former Inheritance Tax and Gift Tax Act. Thus, in this case where the market price of shares of this case can be calculated under Article 60(1)1 (a) of the former Inheritance Tax and Gift Tax Act with respect to one share of this case, the transfer price of this case can not be applied to the case where the largest shareholder is assessed by supplementary assessment method and supplementary assessment method under Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act. Thus, the defendant's wrongful calculation method of shares of this case is unlawful.

(2) Even if the market price at the time of transfer of the shares of this case is calculated by applying the supplementary evaluation method under Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act, the purport of evaluating the shares of the largest shareholder is to reflect the value of management or right of management. Thus, the purport of assessing the shares of this case is to reflect the value of management or right of management. Since the transfer of shares of this case is without a change in management or a trade

(b) Related statutes;

○ The Act before it was amended by Act No. 7006 of December 30, 2003

§ 101. Unfair Act and calculation of transfer income

(1) If it is deemed that any act or computation of a resident having any transfer income has reduced unreasonably the tax burden on such income through transactions with a person having a special relationship with the resident, the chief of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the local tax office may calculate the income amount for the relevant

(4) The scope of persons in special relationship under paragraph (1) and other necessary matters concerning wrongful calculation shall be prescribed by the Presidential Decree.

○ The former Enforcement Decree of the Income Tax Act before it was amended by Presidential Decree No. 17825 of December 30, 2002

Article 98 (Disliability of Evaluation of Wrongful Acts)

(1) The term "a person having a special relationship" under Articles 41 and 101 of the Act means one of the following persons:

4. The corporation in which the relevant resident and persons under subparagraphs 1 through 3 possess 50/100 or more of the total issued stocks or investments, or whose representative is the relevant resident;

(2) The term "if it is deemed that any act makes the burden of tax reduced unreasonably" in Article 41 of the Act means cases falling under any of the following subparagraphs:

1. When a person purchases assets from a related party at a price higher than the market price or transfers assets to a related party at a price lower than the market price;

Article 167 (Unfair Act and Calculation of Transfer Income)

(3) The term “if it is deemed that any act makes the burden of tax reduced unreasonably” in Article 101 (1) of the Act means the occasion falling under each subparagraph of Article 98 (2).

(4) In case of transactions with related parties under each subparagraph of Article 98 (1), if it is deemed that any tax burden has been unjustly reduced due to the acquisition of land, etc. in excess of the market price or the transfer of land, etc. in excess of the market price, such acquisition

(5) In applying the provisions of paragraphs (3) and (4), the market price shall be the value assessed by applying mutatis mutandis the provisions of Articles 60 through 64 of the Inheritance Tax and Gift Tax Act and Articles 49 through 59 of the Enforcement Decree of

In such cases, "period not exceeding six months (three months in the case of donated property) before or after the evaluation date" in the main sentence of Article 49 (1) of the Inheritance Tax and Gift Tax Act shall be deemed "period of six months before or after the date of transfer or acquisition"

○ Former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

Article 60 (Principles for Evaluation, etc.)

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(2) The market price referred to in paragraph (1) shall be the price which is deemed to be normal in cases of free trade between many and unspecified persons, and shall include the price of expropriation, public auction, appraisal price, and others which are deemed to be the market price

(3) In applying paragraph (1), where it is difficult to compute the market price, the price assessed by the methods prescribed in Articles 61 through 65 shall be based on the types, scale, transaction conditions, etc. of the relevant property.

Article 63 (Evaluation of Securities, etc.)

(1) The appraisal of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(a) Stocks and equity shares traded on the Korea Stock Exchange shall be the average daily market price ( regardless of whether they have a transaction record) published on two months before or after the evaluation base date: Provided, That in the calculation of the average amount, if it is inappropriate to be based on the average amount of the period calculated, as prescribed by Presidential Decree, between two months before and after the evaluation base date, due to causes such as capital increase or merger, etc., during two months before or after the evaluation base date, the average amount of the periods calculated as prescribed by Presidential Decree;

(b) The provisions of item (a) shall apply mutatis mutandis to the stocks and equity shares as prescribed by the Presidential Decree from among the stocks and equity shares of the Association-registered corporations as prescribed by the Presidential Decree. In this case, the “final market price”

(3) In applying the provisions of paragraphs (1) 1 and (2), 20/100 of the value appraised under the provisions of paragraphs (1) 1 and (2) of this Article shall be added to the value of stocks and equity shares (excluding stocks and equity shares of a corporation that has losses under the provisions of Article 14 (2) of the Corporate Tax Act continuously from a business year within three years before the business year including the base date for appraisal) of the largest shareholder, largest investor, and stockholders or investors in a special relationship with such largest shareholder (hereafter referred to as "major shareholder, etc." in this paragraph) as prescribed by the Presidential Decree, but where the largest shareholder, etc. holds in excess of 50/100 of the total number of stocks issued by the relevant corporation, 30/100 shall be added thereto.

○ Pre-amended by Presidential Decree No. 17808 of December 30, 2002, the Enforcement Decree of the former Inheritance Tax and Gift Tax Act

Article 53 (Appraisal, etc. of Stocks, etc. of Association-registered Corporations)

(3) The term “major shareholder or largest investor as prescribed by the Presidential Decree” in Article 63 (3) of the Act means the person falling under the main sentence of Article 19 (2) and the person in the relationship falling under any subparagraph of the said paragraph of the said Article with him.

Article 19 (Inheritance Deductions of Financial Property)

(2) The term "major shareholder or largest investor as prescribed by the Presidential Decree" in Article 22 (2) of the Act means the relevant stockholder, etc. in case where the sum of stocks, etc. held by one shareholder or one investor (hereinafter referred to as the "shareholders, etc.") and those held by a person with a relationship falling under any of the following subparagraphs is the largest:

1. Relatives;

2. Persons other than employees and employees, who maintain their livelihood with the property of such stockholders, etc.;

3. A person who is in the relationship falling under any of the following items with an enterprise group as prescribed by the Ordinance of the Ministry of Finance and Economy (including persons who are officers of the enterprise concerned), or who is deemed to exercise de facto influence over the management through exercising the right to appoint and dismiss officers of the enterprise, determining business policies,

(a) Other companies belonging to an enterprise group;

(b) A person who substantially controls an enterprise group;

(c) Relatives of the persons under item (b);

4. Non-profit corporations established by one shareholder, etc. and persons under subparagraphs 1 through 3 who occupy the majority of directors or contribute assets;

5. Nonprofit corporations in which an officer of an enterprise under the main sentence of subparagraph 3 or (a) is the president.

6. A corporation in which one stockholder, etc. and persons under subparagraphs 1 through 5 own 30/100 or more of the total number of stocks issued;

C. Determination

(1) On the other hand, even if a resident’s act or calculation is consistent with objective facts and is legally effective and lawful, in a case where the act or calculation constitutes a type of transaction which unfairly reduces tax burden between the special-related parties under the former Enforcement Decree of the Income Tax Act, the taxation authority intends to realize fair taxation by supplementing the substance over form principle by deeming that there was income objectively reasonable and thereby supplementing the substance over form principle. Thus, the wrongful calculation is sufficient if it is deemed that a certain transaction between certain special-related persons cannot be deemed a normal transaction to be taken by a reasonable economic person in light of social norms and customs, and thus, it is deemed that a reasonable transaction between certain special-related persons has reduced tax burden unfairly. (See Supreme Court Decision 200Du1799, Jan. 11, 2002).

According to the above facts, the plaintiff transferred the shares of this case to a person in a special relationship with him through over-the-counter trading at the closing price of the Association brokerage market prior to his trading. According to the above related Acts and subordinate statutes, Article 167 (5) of the former Enforcement Decree of the Income Tax Act which provides necessary matters concerning wrongful calculation by delegation under Article 101 (4) of the former Income Tax Act provides that "the market price applicable to the transfer of assets to a person in a special relationship is determined by the mutatis mutandis application of Articles 60 through 64 of the former Inheritance Tax and Gift Tax Act and Articles 49 through 59 of the Enforcement Decree of the same Act." The latter part of Article 60 (1) of the former Inheritance Tax and Gift Tax Act provides that "the value appraised by the method of evaluation under Article 63 (1) 1 (a) and (b) of the former Inheritance Tax and Gift Tax Act shall be deemed as the market price, and the amount appraised by the method of evaluation under Article 63 (1) 1 (b) of the former Inheritance Tax and Gift Tax Act shall be deemed as the market price reduced by "."

Therefore, in the case of transfer of stocks of this case by over-the-counter trading with the Plaintiff’s specially related person at the closing price of the Association brokerage market as of the day immediately preceding the trading day, the Plaintiff, pursuant to Articles 53(3) and 19(2)6 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, if the Plaintiff and ○○○○, who own 30.01% of the shares of this case, are combined with the shares of the company of this case, 34% shares in the company of this case, and the total amount of shares held is the largest, shall be assessed as the shareholder of this case. In this case, the market price of the shares of this case, which are the Plaintiff’s shares, shall not be 9,90 won as the closing price of the Association brokerage market immediately preceding the trading day as alleged by the Plaintiff, but shall be 9,900 won as the average amount of the final market price of the Korea Stock Exchange before and after the transfer date under Article 63(3) of the Inheritance Tax and Gift Tax Act.

Therefore, the Plaintiff’s transfer of the instant shares to ○○○, which is a lower price than KRW 11,938, which is the market price, is deemed to have reduced the tax burden (Article 60(3) of the former Inheritance Tax and Gift Tax Act shall be deemed to be unreasonably reduced if it is difficult to calculate the market price in the application of the provisions of Article 60(1) of the former Inheritance Tax and Gift Tax Act. (Article 60(3) of the former Inheritance Tax and Gift Tax Act provides that if it is difficult to calculate the market price, it shall be based on the assessed method under Articles 61 through 65, taking into account the type, scale, transaction situation, etc. of the relevant property, it may be interpreted as a supplementary assessment method applicable to cases where it is difficult to calculate the market price under Article 63(1)1 of the former Inheritance Tax and Gift Tax Act. However, as seen earlier, as long as the latter part of Article 60(1) of the former Inheritance Tax and Gift Tax Act provides that the amount of listed shares assessed under Article 63(1).

(2) On the other hand, the purport of the former Enforcement Decree of the Inheritance Tax Act is to reflect the fact that the shares owned by the controlling shareholder are related to the management right and are different in the transferability of shares owned by the minority shareholder compared to the shares owned by the controlling shareholder, and thus, it is not to stipulate the purport that the appraisal of shares differs depending on whether the transfer of shares by the controlling shareholder results in the transfer of the management right (see Supreme Court Decision 2001Du8292, Feb. 11, 2003).

As to this case, the Plaintiff’s share in the company of this case is transferred to ○○○ through the transfer of shares, and there is a change in the management right. Even if the Plaintiff, as the largest shareholder of ○○○○○○, can exercise the management right of the company of this case before and after the transfer of shares, the Plaintiff can exercise the management right of the company of this case through ○○○○○○, so whether to evaluate the shares of this case can be determined depending on whether the shares of this case constitute the largest shareholder regardless of the change in management right. As seen earlier, the Plaintiff’s share of this case constitutes the largest shareholder’s share in the company of this case. Thus, the Plaintiff

(3) Ultimately, in cases where the Plaintiff, who is the largest shareholder of the instant company, transfers the instant shares to a person in a special relationship with the Plaintiff, so long as the instant shares are transferred at the transfer price under Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act, which is less than the price calculated by the largest shareholder under Article 63 (3) of the same Act, which is deemed the market price, it constitutes an act of unreasonably reducing the tax burden by transferring assets to a person in special relationship at a lower price than the market price. Accordingly, the Defendant’s imposition of the instant shares by applying the provision of Article 63 (3) of the former Inheritance Tax and Gift Tax Act, which applies only to cases where the value of the shares is assessed by the supplementary evaluation method and supplementary evaluation method under Article 63 (1) 1 (a) of the same Act, shall be deemed as the market price of the instant shares, and by applying the provision of the rejection of wrongful calculation under Article 101 of the former Income 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.

[Seoul High Court Decision 2007Nu33148, May 15, 2008]

1. Revocation of a judgment of the first instance;

2. The Defendant’s imposition of capital gains tax of KRW 652,812,170 against the Plaintiff on March 2, 2005 shall be revoked.

3. The costs of the lawsuit shall be borne by the Defendant in both the first and second instances.

The same shall apply to the order.

1. Details of the disposition;

A. ○○ Holdings Co., Ltd. (hereinafter “○○○ Holdings”) is a company registered with the Association (i.e., KOSDAQ-registered companies). Of the total issued stocks, the Plaintiff owned 18.2% (i.e., 2,008, 940 shares; hereinafter “instant shares”); 15.8% of the total issued stocks; and 19.5% of the foreign fund company.

B. The Plaintiff, as the representative director of ○○○, owned 30.1% of the 30.1% of the 30.1% of the 30.1% of the shares and thus, the Plaintiff and ○○○ constitutes “a person having a special relationship under Article 101(1) and (4) of the former Income Tax Act (amended by Act No. 7066 of Dec. 30, 2003; hereinafter the same shall apply) and Article 98(1)4 of the former Enforcement Decree of Income Tax Act (amended by Presidential Decree No. 17825 of Dec. 30, 200; hereinafter the same shall apply). The Plaintiff and ○○○ constituted “a person having a special relationship under Article 98(1)4 of the former Enforcement Decree of Income Tax Act” (amended by Presidential Decree No. 17825 of Dec. 30, 202; hereinafter the same shall apply) and Article 63(3) of the former Inheritance Tax and Gift Tax Act.

C. On July 31, 2001, the Plaintiff transferred the instant stocks to ○○ through over-the-counter trading to KRW 9,900,00, the closing price of the Association Brokerage Market on the day immediately preceding the trading date (hereinafter “the transfer price of this case”), and made a preliminary return on the tax base of transfer income by making the transfer price of this case as the transfer price per share of the instant stocks, and paid the said tax amount.

D. On March 2, 2005, the defendant issued the instant disposition imposing capital gains tax of KRW 652,812,170 to the plaintiff for the year 2001. The grounds for the disposition are as follows.

『 이 사건 양도가격은 구 상속세 및 증여세법 제60조 제1항에 따른 이 사건 주식의 1주당 시가로 볼 수 없고, 구 상속세 및 증여세법 제63조 제1항 제1호 가목에 의한 평가기준일(양도일) 전⋅후 2월간의 한국증권거래소 최종시세가액의 평균액 9,949원에, 구 상속세 및 증여세법 제63조 제3항에 따라 할증률 20%의 최대주주 할증가액을 가산한 11,938원을 이 사건 주식의 1주당 시가로 보아야 한다. 따라서 원고는 이 사건 주식을 특수 관계있는 자인 ○○에게 시가인 11,938원보다 낮은 가격인 이 사건 양도가격에 양도하여 조세의 부담을 부당하게 감소시킨 것으로 인정된다. 그러므로 구 소득세법 제101조 제1항의 양도소득의 부당행위계산부인 규정을 적용하여, 원고가 신고한 양도가액과의 차액 4,094,219,720원{(11,938원-9,900원)☓2,008,940주}에서 증권거래세 산출세액 20,471,098원을 차감한 4,073,748,622원을 소득금액에 가산한다.」

[Recognition] Facts without dispute, Gap evidence 1-1, Eul evidence 1-1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. Summary of the plaintiff's assertion

(1) Article 63(1)1 of the former Inheritance Tax and Gift Tax Act is merely a supplementary assessment method applicable to cases where it is difficult to calculate the market price under Article 60(1) of the same Act as of the base date of appraisal. In transferring the instant shares, the transfer price of the Plaintiff is the closing price of the Association Brokerage Market as of the day immediately preceding the transaction date, and that price constitutes the market price as provided in Article 60(1) of the same Act, which is the objective exchange price formed through a normal transaction between many and unspecified persons, and is the market price defined in Article 60(1) of the same Act. As such, since the market price of the instant shares can be calculated for the instant shares by means of a supplementary assessment method and supplementary assessment method as provided in Article 63(1)1(a) of the same Act, the provision on the largest shareholder under Article 63(3) of the same Act, which applies only to cases where

(2) Even if the market price at the time of transfer of the shares of this case is calculated by applying the supplementary evaluation method stipulated in Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act, the purport of the appraisal of the shares of this case is to reflect the value of management or right of management. Thus, since the transfer of shares of this case is a transaction between the largest shareholders and there is no change in management or right of management, the provision

(b) Related statutes;

Article 101 of the former Income Tax Act (amended by Act No. 7006 of Dec. 30, 2003) by wrongful calculation of transfer income under Article 101 of the former Income Tax Act.

(1) If it is deemed that any act or computation of a resident having any transfer income has reduced unreasonably the tax burden on such income through transactions with a person having a special relation with the resident, the chief of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the local tax office may calculate the income amount for the relevant year

(4) The scope of persons specially related under the provisions of paragraph (1) and other necessary matters concerning wrongful calculation shall be prescribed by the Presidential Decree.

Article 98 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17825 of Dec. 30, 2002) rejected of wrongful calculation

(1) "Person in a special relationship" in Articles 41 and 101 of the Act means a person in a relationship falling under any of the following subparagraphs:

4. The corporation in which the relevant resident and persons under subparagraphs 1 through 3 possess 50/100 or more of the total issued stocks or investments, or whose representative is the relevant resident;

(2) The term "if it is deemed that any act makes the burden of tax reduced unreasonably" in Article 41 of the Act means cases falling under any of the following subparagraphs:

1. When a person purchases assets from a person with a special relationship at a price higher than the market price, or transfers assets to a person with a special relationship at a price lower than the market price;

Article 167 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 17825 of Dec. 30, 2002) (amended by the Presidential Decree No. 17825 of Dec.

(3) The term “if it is deemed that any act makes the burden of tax reduced unreasonably” in Article 101 (1) of the Act means the occasion falling under each subparagraph of Article 98 (2).

(5) In the application of the provisions of paragraphs (3) and (4), the market price shall be the value appraised by applying mutatis mutandis the provisions of Articles 60 through 64 of the Inheritance Tax and Gift Tax Act and Articles 49 through 59 of the Enforcement Decree of the same Act. In this case, the term “period within 6 months before or after the standard date of appraisal (3 months in the case of donated property)” in the main sentence of Article 49 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax

Article 60 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002), the principle of evaluation, etc.

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(2) The market price referred to in paragraph (1) shall be the price which is deemed to be normal in cases of free trade between many and unspecified persons, and shall include the price of expropriation, public auction, appraisal price, and others which are deemed to be the market price

(3) In applying paragraph (1), where it is difficult to compute the market price, the price assessed by the methods prescribed in Articles 61 through 65 shall be based on the types, scale, transaction conditions, etc. of the relevant property.

Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002), the appraisal of securities, etc.

(1) The appraisal of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(a) Stocks and equity shares traded with the Korea Stock Exchange shall be the average amount of the final market price ( regardless of whether they have a transaction record) of the Korea Stock Exchange every two months before or after the evaluation base date: Provided, That in the calculation of the average amount, in cases where it is inappropriate to be based on the average amount of the period calculated, as prescribed by Presidential Decree, during two months before or after the evaluation base date, in cases of capital increase or merger, etc. which have occurred during two months before or after the evaluation base date, the average amount of the periods calculated

(b) The provisions of item (a) shall apply mutatis mutandis to the stocks and equity shares as prescribed by the Presidential Decree among the stocks and equity shares of the Association-registered corporations as prescribed by the Presidential Decree. In this case, the “final market price” shall be deemed

(3) In the application of the provisions of paragraphs (1) 1 and (2), 20/100 of the value appraised under the provisions of paragraphs (1) 1 and (2) of this Article shall be added to the value of stocks and equity shares (excluding stocks and equity shares of a corporation that has losses under the provisions of Article 14 (2) of the Corporate Tax Act continuously from business year within three years before the business year including the appraisal base date) of the largest shareholder, largest investor, and stockholders or investors specially related to such largest shareholder (hereafter referred to as "major shareholder, etc." in this paragraph) as prescribed by the Presidential Decree, but where the largest shareholder, etc. holds in excess of 50/100 of the total number of stocks issued by the relevant corporation, 30/100 shall be added thereto. In this case,

Article 19 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17808, Dec. 30, 2002) (amended by Presidential Decree No. 17808, Dec.

(2) The term "major shareholder or largest investor as prescribed by the Presidential Decree" in Article 22 (2) of the Act means the relevant stockholder, etc. in case where the total number of stocks, etc. held by one shareholder or one investor (hereinafter referred to as the "shareholders, etc.") and a person with a relationship falling under any of the following subparagraphs is the largest:

1. Relatives;

2. Persons other than employees and employees, who maintain their livelihood with the property of such stockholders, etc.;

3. Persons who are in the following relations with an enterprise group as determined by Ordinance of the Ministry of Strategy and Finance (including executives of the enterprise) or persons who are deemed to exercise de facto influence over the management of the enterprise group by exercising the right to appoint and dismiss executives of the enterprise or by determining business policies:

(a) Other companies belonging to an enterprise group;

(b) A person who substantially controls an enterprise group;

(c) Relatives of the persons under item (b);

4. Non-profit corporations established by one shareholder, etc. and persons under subparagraphs 1 through 3 who occupy the majority of directors or contribute assets;

5. Nonprofit corporations in which an officer of an enterprise under the main sentence of subparagraph 3 or (a) is the president.

6. A corporation in which one stockholder, etc. and persons under subparagraphs 1 through 5 own 30/100 or more of the total number of stocks issued;

Article 53 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17808 of December 30, 2002), appraisal, etc. of stocks of Association-registered corporations, etc.

(3) The term “major shareholder or largest investor as prescribed by the Presidential Decree” in Article 63 (3) of the Act means the person falling under the main sentence of Article 19 (2) and the person having the relationship falling under any subparagraph of the said Article with him.

C. Determination

According to the relevant provisions of the former Enforcement Decree of the Income Tax Act and the former Enforcement Decree of the Income Tax Act, where a resident transfers assets to a person with a special relationship at a price lower than the market price, the term "market price" refers to the value appraised by applying mutatis mutandis Articles 60 through 64 of the former Inheritance Tax and Gift Tax Act.

However, under Article 60 of the former Inheritance Tax and Gift Tax Act, the calculation of the value of property by the supplementary evaluation methods stipulated in Articles 61 through 65 of the same Act is limited to cases where it is difficult to calculate the market price as of the evaluation base date, and the tax authority bears the burden of proving that it is difficult to calculate the market price. Here, the market price refers to cases where free transactions are made between many and unspecified persons (see Supreme Court Decision 2003Du5723, Oct. 15, 2004). The provision on the certificate of largest shareholder under Article 63 (3) of the former Inheritance Tax and Gift Tax Act applies only to cases where the value of stocks is assessed by the supplementary evaluation methods under Article 63 (1) 1 of the same Act. If the value of stocks is assessed by the market price, the provision on the certificate of largest shareholder can not be applied even if the largest shareholder, etc. holds the stocks, which shall not be deemed to be the market price under Article 60 (1) 1 (a) and (b) of the same Act.

There is no evidence to acknowledge that the transfer price of this case does not correspond to the market price of this case at the time of transfer and that it is difficult to calculate the market price (or, in light of the fact that the transfer price of this case 9,900 won is only the difference between the average market price of the Korea Stock Exchange for 2 months before and after the date of transfer and 9,949 won and that the transfer price of this case falls under the above "market price" as referred to in Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act, and therefore, the transfer price of this case cannot be calculated as the supplementary evaluation method stipulated in Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act.

3. Conclusion

Therefore, the disposition of this case is unlawful, and the judgment of the court of first instance with different conclusions is unfair, and it is so decided as per Disposition with the plaintiff's appeal acceptance.