Where forfeited shares arising from the waiver of preemptive rights by shareholders are cultivated, the method of appraisal of preemptive rights;

Article 12 (1) 6 of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 15970 of Dec. 31, 1998) provides that the value of assets received without compensation shall be determined at the normal price as of the time of acquisition pursuant to Article 37 (1) 3 of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 15970 of Dec. 31, 1998). The term "normal price" refers to the market price which is the exchange value, which is in principle an objective exchange price formed through normal transactions. Thus, if there is no exchange price through transactions, the appraisal institution's appraisal value can be deemed the market price. If it is difficult to calculate the market price, the value shall be assessed according to an objective and reasonable method in lieu of the market price, but the provision of Article 16-2 of the former Enforcement Decree of the Corporate Tax Act (amended by the Ordinance of the Prime Minister No. 622 of Mar. 29, 1997) provides that the value of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 15).

Article 9 (2) 3 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998 see current Article 15 (1) 5) Article 16-2 of the Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 622 of Mar. 29, 1997 see current Article 89 (2) of the Enforcement Decree of the Corporate Tax Act) Article 5 (6) 1 (c) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15193 of Dec. 31, 1996 see current Article 63 (1) 1 (c) and Article 41-4 (2) 1 (see current Article 29 (3) 2 of the Inheritance Tax and Gift Tax Act)

Supreme Court Decision 98Du1369 delivered on December 10, 1999 (Gong2000Sang, 230) Supreme Court Decision 98Du14303 delivered on February 11, 2000 (Gong2000Sang, 725) Supreme Court Decision 2000Du4378 Delivered on July 26, 2002 (Gong2002Ha, 2087)

Dicts Co., Ltd. (trade name before a change: Social Development Macts Co., Ltd.)

Head of Geumcheon Tax Office

Seoul High Court Decision 2001Nu10334 delivered on April 23, 2002

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

We examine the grounds of appeal.

1. According to the reasoning of the lower judgment, the lower court determined that: (a) as the Plaintiff newly issued 10,000 won of non-listed shares to increase new shares on July 12, 1996 for the purpose of issuing new shares with a value of 100,000 won; (b) the forfeited shares were once again allocated to the Plaintiff at par value; (c) the Defendant, except for the Plaintiff, once again allocated forfeited shares to the Plaintiff due to the waiver of preemptive rights by the remaining shareholders; (d) Article 9(2) of the former Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998; hereinafter the same shall apply); and (e) Article 12(1)6 of the former Enforcement Decree (amended by Presidential Decree No. 15970, Dec. 31, 198; hereinafter the same shall apply); and (e) the value of the new shares should be calculated by adding the value of the new shares to the value of the new shares at issue without consideration.

2. The value of assets received without compensation under Article 12 (1) 6 of the former Enforcement Decree of the Corporate Tax Act shall be determined at the normal price as at the time of acquisition pursuant to Article 37 (1) 3 of the former Enforcement Decree of the Corporate Tax Act. Here, the market price refers to the exchange value, which is in principle, and if there is no exchange price through ordinary transactions, the appraisal value of reliable appraisal institutions can also be deemed the market price. If it is difficult to calculate the market price, then the value shall be assessed according to objective and reasonable methods in lieu of the market price. In this case, by applying Article 16-2 (2) through (7) of the former Enforcement Decree of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 622 of March 29, 197), Article 5 (2) through (7) of the former Enforcement Decree of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 2014, Mar. 29, 1997).

On the contrary, the court below erred by misapprehending the legal principles as to the method of appraisal, which affected the conclusion of the remaining judgment, in assessing the value of unlisted stocks in accordance with the formula under paragraph (2). The ground of appeal pointing this out is with merit.

3. Therefore, the part of the judgment below against the defendant is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jae- Jae (Presiding Justice)