Daejeon High Court 2014Nu67 (No. 29, 2014)

Daejeon District Court 2012Guhap5246 ( October 22, 2014)

Since the stock price and asset transaction price are not the same, it shall not be deemed an unfair act.

The price of stock transaction is determined through price negotiations in consideration of the original transaction amount of the heat consolidated power generation facilities of this case, investment refund, opportunity cost, etc. in order to determine the claim for damages due to the breach of energy supply contract and the claim for commercial arbitration in a lump sum. It is difficult to view that the object of stock transaction and the object of the asset transaction of this case

2014Du9073 Revocation of Disposition of Corporate Tax Imposition

AA fever Development Co., Ltd.

○ Head of tax office

Daejeon High Court Decision 2014Nu67 decided May 29, 2014

October 27, 2014

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. The method of wrongful calculation under Article 52 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same) is a system where a corporation’s act of wrongful calculation is deemed to have avoided or reduced tax burden by abusing various forms of transactions listed in each subparagraph of Article 88(1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18706, Feb. 19, 2005; hereinafter the same) without using a reasonable method from a person with a special relationship. This system applies only to cases where it is deemed that the person who has the authority to impose tax denies or reduced tax burden by abusing the forms of transactions in favor of the person with a special relationship, the person has the authority to impose tax, and where it is deemed that the person has committed an unnatural or unreasonable act, disregarding the economic rationality and that the calculation of an act was conducted in view of sound social norms and commercial practices (see, e.g., Supreme Court Decision 2013Du161113).

2. The court below, citing the reasoning of the judgment of the court of first instance, found the Plaintiff’s 10 billion won of the Plaintiff’s 70 billion won of the stock transfer of 40 billion won of the Plaintiff’s 10 billion won of the stock transaction (the Plaintiff’s 200 billion won of the stock transfer of 40 billion won of the Plaintiff’s 70 billion won of the stock transaction) and concluded an energy supply contract with the Plaintiff on December 27, 199 that the Plaintiff would exclusively supply the entire amount of steam and electricity produced from the instant heat generation facilities (the “Energy supply contract”) with the Plaintiff, 40 billion won of the stock transfer of 40 billion won of the Plaintiff’s 100 billion won of the stock transaction (the Plaintiff’s 200 billion won of the stock transfer of 400 billion won of the stock exchange of 5 billion won of the Plaintiff’s 100 billion won of the stock exchange of 100 billion won of the Plaintiff’s 100 billion won of the stock supply of the Plaintiff.

In addition, the lower court determined that: (a) the Plaintiff’s decision to accept the Plaintiff was derived from the Plaintiff’s filing an application for arbitration with the International Commercial Arbitration Commission by taking into account the issue of the Plaintiff’s violation of the Energy Supply Contract; and (b) at that time, the Plaintiff’s request for compensation for damages and the re-purchase of the instant heat power generation facilities; (c) at that time, under the circumstances where it is difficult to acknowledge the result of the arbitration in a stable manner, the Plaintiff was provided with energy from the instant heat power generation facilities in the future; (d) first, the SS proposed that the SS would purchase the Plaintiff’s shares from AA and then agreed that the Plaintiff would withdraw the Plaintiff’s application for arbitration; and (b) the price of the instant stock transaction was determined to be unlawful on the grounds that the Plaintiff’s request for compensation for damages and the application for commercial arbitration due to the violation of the Energy Supply Contract, taking into account the interest rate of KRW 10 billion,000,000,000,000 won for the first transaction price of the instant stocks transaction and the net assets amount of KRW 1.81.

3. In light of the aforementioned legal principles and records, the above fact-finding and determination by the court below are just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles as to the market price in the provision

4. Therefore, the appeal is 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.