Seoul Administrative Court 2015Gudan59719 ( October 28, 2016)

Determination of the wrongful calculation shall be made on the basis of the average daily market price published every two months before and after the date of transfer.

It is reasonable to view that the transfer value of the provisions related to the transfer of shares of a stock-listed corporation between related parties is the final market price at the Korea Exchange on the transaction date and that the corporation is not subject to unfair calculation under the Corporate Tax Act.

Article 167 of the Enforcement Decree of Income Tax Act

2016Nu55102 Revocation of disposition of imposing capital gains tax

Plaintiff (Appellant)

KimA

Defendant (Appellant)

The Director of Gangnam District Office

October 6, 2016

November 3, 2016

1. The plaintiff's appeal is dismissed.

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

the Gu Office's place of service and place of service

The judgment of the first instance shall be revoked. The transfer income tax reverted to the Plaintiff on January 5, 2015, which the Defendant rendered to the Plaintiff on January 5, 2015

The imposition of KRW 490,823,050 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of this court's judgment is as follows, with the exception of adding or adding a part of the judgment of the court of first instance as follows and adding a judgment on the plaintiff's argument to the appellate court under Paragraph 2 below, and therefore, it is consistent with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Part to be added or dried.

○ On the second page, the following shall be added to the 8th page:

C. On August 31, 2012, the Plaintiff’s consolidation of KRW 8,800 per share, which is the actual transaction price of the instant shares, to the Defendant.

The transfer income tax amount of KRW 5,984,00,000 was reported and paid by using the transfer value.

Part 2, 9, 9, 13, 14, 14, 14, 14, 14, 2, 3, 3, 3, 3, 3, 3, 3, 3, 4, 5, 5,

Jinaly,

○ Part 2, " January 8, 2015," shall be " January 5, 2015," respectively.

Part 5, Part 9, "Article 67" is advanced to "Article 167".

○ Part 6 3 of the Enforcement Decree of the Income Tax Act shall be deleted.

○, No. 6, 11, "transfer date" is regarded as "transfer date".

The "relevant Acts and subordinate statutes" in the attached Form of the judgment of the court of first instance is replaced by the "relevant Acts and subordinate statutes" of this judgment.

2. Judgment on the Plaintiff’s assertion of appeal

A. The plaintiff's assertion

Despite the fact that the transfer value of the instant shares does not amount to KRW 9,200, the market price under Article 89 of the Enforcement Decree of the Corporate Tax Act, in applying Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act, it is unreasonable to apply Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act to KRW 11,478, which is the market price under Articles 60 and 63 of the Inheritance Tax and Gift Tax Act. In applying Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act, the market price shall also follow the market price under Article 89 of the Corporate Tax Act as well as Article 167(3) and (5) of the Corporate Tax Act. Ultimately, the instant transfer is merely 400 won per share (i.e., the closing price on the date of the instant transfer - KRW 9,200 per share).

B. Determination

In light of the following circumstances, in applying Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act to the transfer of this case, the market price is not 9,200 won which is the market price under Article 89 of the Enforcement Decree of the Corporate Tax Act, but 11,478 won which is the market price under Articles 60 and 63 of the Inheritance Tax and Gift Tax Act. Therefore, the Plaintiff’s assertion on other premise is without merit

1) Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act, which is a provision that denies capital gains, applies mutatis mutandis to market prices, while Article 60 through 64 of the Inheritance Tax and Gift Tax Act, which provides that Article 89 of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to cases where the denial of capital gains by wrongful calculation between an individual and a corporation is excluded with respect to the acquisition of property between an individual and a corporation. The above provisions

2) Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 167(5) applies mutatis mutandis to the determination of whether the transfer of this case constitutes a wrongful calculation of capital gains and the calculation of the denied value shall be based on the market price under Articles 60 through 64 of the Inheritance Tax and Gift Tax Act, to which Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis mutatis mutandis, and the market price shall not be based on the market price under Article 89 of the Enforcement Decree of the Corporate Tax Act, to which Article 167(3) and (5) shall apply mutatis mutandis.

3) According to Article 167(3) and (5) of the Enforcement Decree of the Income Tax Act, the market price shall be the value assessed by applying mutatis mutandis Articles 60 and 63 of the Inheritance Tax and Gift Tax Act with respect to the evaluation of listed stocks. Meanwhile, Article 60(1) of the Inheritance Tax and Gift Tax Act provides that, in principle, the value assessed according to the evaluation method stipulated in Article 63(1)1 (a) shall be deemed as the market price in order to exclude arbitraryness in the evaluation and ensure objectivity, taking into account the following factors: (a) the system stipulated in Articles 60 and 63 of the Inheritance Tax and Gift Tax Act with respect to the evaluation method of listed stocks; (b) the purport of the system with respect to the evaluation method of stocks by wrongful calculation; and (c) the calculation of the denied value thereof; (c) the market price of transferred listed stocks shall be 60% of the average market price per day before and after the transfer date calculated pursuant to Article 63(1)1 (a) of the Inheritance Tax and Gift Tax Act; and (c) the largest shareholder shall be deemed as the market price per three months before and after the transfer date.

3. Conclusion

Since the judgment of the first instance is justifiable, the plaintiff's appeal is dismissed as it is groundless.