Plaintiff (Law Firm continental Aju, Attorneys Song-sik et al., Counsel for the plaintiff-appellant)

The Director of Gangnam District Office

April 6, 2012

1. All of the plaintiff's claims are dismissed.

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

Each disposition imposing gift tax on the Plaintiff on March 4, 2011 as listed in the separate sheet No. 1, which the Defendant rendered against the Plaintiff, shall be revoked.

1. Details of the disposition;

A. On April 10, 2007, Amino-based corporation, Inc., a KOSDAQ-listed corporation (the trade name before the change is Epis Co., Ltd.; hereinafter “Epis”) adopted a resolution to issue 4,262,430 shares of registered ordinary stocks by holding a board of directors to 11,500 won per share of 4,262,430 shares, including the Plaintiff, to 49 members including the Plaintiff, by a third party allocation method.

B. The Plaintiff participated in the above subscription to new shares on May 4, 2007 and subscribed 1,69,930,000 won for new shares on the same day and paid 1,69,930,000 won for the same day, and 49 members acquired 4,261,394 shares in total, and paid 49,006,031,000 won in total.

C. As of May 3, 2007 as of May 3, 2007, the Defendant calculated the “value per share before the capital increase” of the non-party company for the previous period as of May 3, 2007, and acquired new shares at a price lower than the market price by the Plaintiff. As a result, the Plaintiff deemed that the Plaintiff received KRW 311,752,379 in total from the existing shareholders through the capital increase by issuing new shares, and thus, on March 4, 2011, the Defendant rendered a decision and disposition under Article 39(1)1 (c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “former Inheritance Tax Act”) to the Plaintiff on the aggregate of gift taxes of KRW 56,08,370 (additional tax, KRW 20,845,931, etc.) (hereinafter “instant calculation method”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on March 24, 2011, but the Tax Tribunal dismissed the Plaintiff’s appeal on August 26, 2011.

【Ground for recognition” without any dispute, Gap’s 1 through 3, Gap’s 4-1 through 16, Gap’s 8, Eul’s 1-1 through 16, Eul’s 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) In a case where new shares are allocated by means of a public offering of new shares pursuant to Article 2(3) of the former Securities and Exchange Act (amended by Act No. 8635 of Aug. 3, 2007; hereinafter the same), Article 39(1) of the former Inheritance and Gift Act (amended by Act No. 8635 of Aug. 3, 2007; hereinafter the same) provided that the amount equivalent to the profits earned by being allocated at a price lower than the market price shall be excluded from the gift tax subject to gift tax. However, the Defendant made the instant disposition in violation of the principle of no taxation without law

2) In calculating the capital increase profits pursuant to Article 29(3)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 23591, Feb. 2, 2012; hereinafter “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”), the Defendant calculated the “value per share before the capital increase” as of the date of the public notice of the capital increase (amended by April 10, 2007), unlike the existing national tax administration practices, the Defendant issued the instant disposition in violation of the principle of prohibition of retroactive taxation and Article 18(3) of the Framework Act on National Taxes, which specify the principle of prohibition of retroactive taxation as of the payment date of the stock price.

3) Since Article 39(2) of the former Inheritance and Gift Tax Act is premised on the establishment of a taxable unit by donor, in cases where gift tax is imposed as of May 4, 2007, a payment date of stock price, based on the share ownership ratio as of May 4, 2007, the amount of gift by donor should be calculated according to the share ownership ratio as of May 4, 2007, the Defendant calculated the amount of gift by donor based on the list of shareholders as of December 31, 2006.

4) The Plaintiff acquired shares as a kind of condition subsequent, upon entering into a new shares subscription contract with the non-party company on the condition of protection, and thus, assessed the shares acquired by the Plaintiff pursuant to Article 65 of the former Inheritance and Gift Tax Act. However, the Defendant assessed the shares acquired by the Plaintiff pursuant to Article 63 of the former Inheritance and Gift Tax Act and disposed

5) With respect to the shares, the transaction of which is prohibited due to safeguard, the average amount of the final market price of the Korea Stock Exchange published for two months before and after the date of acquisition of the shares as stipulated in Article 63(1)1(a) of the former Inheritance and Gift Tax Act, shall not be considered as the market price of the shares. Although the former Inheritance and Gift Tax Act does not provide for the method of assessing the shares whose transaction is prohibited due to safeguard, the Defendant assessed the shares acquired by the Plaintiff in accordance with the above provision

6) In the case of the capital increase in the method of allocating the third party, the Plaintiff’s assessment of the shares acquired by the Plaintiff on the basis of the date of the public notice of capital increase based on the national tax administration, which calculated the “value per share before the capital increase” as of the date of the public notice of capital increase, did not report and pay gift tax on the ground that the Plaintiff did not gain any profit from the capital increase, and thus, there was a justifiable reason not attributable to

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. Determination

1) Determination on the first argument

A) Article 39 (1) 1 (c) of the former Inheritance and Gift Tax Act provides that where a corporation issues new stocks at a price lower than their market price to increase its capital by directly obtaining profits from the corporation concerned, the amount equivalent to such profits shall be deemed the value of donated securities of the person who has acquired such profits: Provided, That where a stock-listed corporation or Association-registered corporation under the Securities and Exchange Act allocates new stocks by means of public offering of new stocks under Article 2 (3) of the former Securities and Exchange Act, the same shall not apply. Article 2 (3) of the former Securities and Exchange Act provides that "public offering of new stocks means solicitation of subscription to acquire new stocks under the conditions as prescribed by Presidential Decree," and Article 2-4 (1) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 2051, Jan. 18, 2008; hereinafter the same shall apply) provides that where such a corporation obtains profits by obtaining new stocks from the corporation, the public offering of new stocks shall be excluded from such solicitation within 50 months from the date of invitation of new stocks or subscription.

In light of the above provisions, Article 39 (1) 1 (c) of the former Inheritance and Gift Tax Act provides that when a corporation issues new stocks at a price lower than their market price in order to increase its capital, a person who receives allocation shall gain profits equivalent to the difference between the market price and the gift tax by including the amount equivalent to the profits in the value of the donated stocks. In the case of the allocation of new stocks through a public offering of new stocks under the former Securities and Exchange Act, it shall be excluded from the imposition of gift tax in the case of a public offering even if a person takes profits from the issuance of discount, it shall be exempted from the imposition of gift tax in the case of a public offering of new stocks. This is to be determined again through a fair competition trading process between unspecified and unspecified persons in Korea, even if a stock-listed corporation or Association-registered corporation issues new stocks through a public offering procedure under the former Securities and Exchange Act and other related Acts and subordinate statutes such as the former Securities and Exchange Act, and in consideration of the fact that a discount issued within a certain limit is easily permitted to raise funds of the stock-listed corporation or Association-registered corporation.

Meanwhile, Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 1508, Feb. 24, 1998) provides that if an issuer issues a single new stock against less than 50 minoritys and resells it again to more than 50 persons, etc., it shall not be included in the concept of public offering and shall not be included in the concept of public offering, it is a newly introduced system at the time of the amendment of the above Enforcement Decree to prevent avoidance of regulation on publication for investor protection. Thus, the "distribution by public offering method of securities", which is the exceptional ground that does not include profits from low-price issuance under Article 39 (1) 1 (c) of the former Enforcement Decree of the Securities and Exchange Act, does not include allocation by deemed to prevent the regulation on public offering of securities for the purpose of investor protection, it shall be limited to general public offering where the number of persons who have been solicited to acquire new securities issued is more than 50.

Furthermore, in order to constitute “distribution by means of a public offering of securities” under Article 2-4(5) of the former Enforcement Decree of the Securities and Exchange Act, which does not include profits from the issuance of low-price prices under Article 39(1)1(c) of the former Inheritance and Gift Act in the value of donated property, the procedures for soliciting an offer under Article 2-4(5) of the former Enforcement Decree of the Securities and Exchange Act, namely, advertisements through newspapers, broadcasting, magazines, etc., the distribution of printed materials, such as notice and promotion leaflets, holding a briefing session for investment, and electronic communications, etc., should not be limited to the methods such as electronic communications, but should be notified of

In addition, inasmuch as the subject of regulation itself is a rapidly changing and diverse economic phenomenon, and the various economic and policy objectives and social security objectives are carried out, the interpretation of Article 39(1)1(c) of the former Inheritance and Gift Tax Act should be permitted to the extent that it does not seriously undermine the legal stability and predictability oriented by the principle of no taxation without law. Therefore, construing Article 39(1)1(c) of the former Inheritance and Gift Tax Act as above cannot be deemed as contrary to the principle of no taxation without law or strict interpretation (see Supreme Court Decision 2007Du4438, Feb. 15, 2008, etc.).

B) On April 10, 2007, the board of directors passed a resolution to issue new shares only with 49 persons including the Plaintiff on April 10, 2007. Accordingly, the issuance of new shares cannot be deemed as falling under the “distribution by the method of public offering of new shares,” which is an exception to the deemed donation due to the offering of new shares as provided by Article 39(1)1(c) of the former Inheritance and Gift Act. Moreover, there is no evidence to deem that the non-party company had gone through the procedure of soliciting subscription under Article 2-4(5) of the former Enforcement Decree of the Securities and Exchange Act. Thus, this part of the Plaintiff’s assertion is without merit

2) Judgment on the second argument

A) With respect to the calculation of the profits deemed to have been donated by issuing at a low price under Article 39(1)1 (c) of the former Inheritance and Gift Tax Act, Article 29(3)1 of the former Enforcement Decree of the former Inheritance and Gift Tax Act provides that the calculation of profits under Article 29(3)1 of the former Enforcement Decree of the said Act shall be made by multiplying the value obtained by subtracting the subscription price per stock (b) from the total number of outstanding stocks before capital increase + the number of new stocks issued before capital increase 】 (the number of stocks increased by the increase by the increase by the increase by the increase by the capital) (a) by the number of forfeited stocks or new stocks allocated to the value obtained by subtracting the subscription price per stock by the increase by the increase by new stocks (b). Article 29(4) of the former Enforcement Decree of the said Act (amended on December 30, 202) provides that the calculation of profits under paragraph (3) of the said Article shall be made on the basis of the payment date

In full view of the language and purport of the above provisions and the purport of the legislation, and the effect of acquiring shares due to the payment of shares, the value of shares acquired by an underwriter should be calculated as at the time of payment of shares, barring any special circumstances, in calculating the "value per share before the capital increase" in the formula provided for in Article 29 (3) 1 (a) of the former Enforcement Decree of the Inheritance and Gift Act with respect to the method of calculating profits arising from the increase of shares by a third party allocation method, the calculation of the "value per share before the capital increase" shall be subject to the prior period, not on the date of resolution of the board of directors concerning the increase of shares pursuant to Article 29 (4) of the former Enforcement Decree of the Inheritance and Gift Act, but on the basis of the day preceding the payment date of shares (see Supreme Court Decision 2007Du7949, Aug.

Meanwhile, the principle of retroactive taxation prohibition stipulated in Article 18(3) of the Framework Act on National Taxes applies only to cases where there are special circumstances that, even if the principle of legality is sacrificeed, the protection of taxpayer's trust is deemed to conform to the justice. The practice of national tax administration generally accepted by taxpayers under that provision refers to the erroneous practice that, even if it is erroneous, it is recognized to the extent that it is not unreasonable for taxpayers to trust such practice. The mere fact that there was an expression of public opinion on the standard of interpretation of tax law does not necessarily mean that such practice has been committed. The burden of proving such interpretation or practice is the taxpayer (see, e.g., Supreme Court Decisions 91Nu13670, Sept. 8, 1992; 2005Du2858, Jun. 29, 2006).

B) As to the instant case, in the formula under Article 29(3)1 through 3 of the former Enforcement Decree of the Inheritance and Gift Tax Act, in the case of listed corporations and KOSDAQ-listed corporations under Article 63(1)1 (b) of the former Enforcement Decree of the Inheritance and Gift Tax Act, “the value per share before capital increase” shall be the average value of the closing price of the Korea Securities and Futures Exchange published by the day immediately before the date when the capital increase occurred. According to the purport of the entry and pleading in subparagraph 3, it is recognized that the Commissioner of the National Tax Service made a reply with regard to the question regarding the above basic provisions on June 28, 2004, that it is reasonable to regard the date when the right revocation was made as the date when the fact was announced.

However, as seen earlier, insofar as the calculation of profits under Article 29(4) of the former Enforcement Decree of the Inheritance and Gift Act (amended by December 30, 2002) and Article 29(3) of the former Enforcement Decree of the said Act expressly stipulate that the payment date of stock price shall be based on the payment date of stock price, it is difficult to deem that the national tax administration practice was established to calculate the “evaluation price per share before the capital increase as of the public announcement date of capital increase.”

Therefore, the Defendant’s calculation of “the assessment value per share before capital increase” based on the payment date of stock price is lawful pursuant to Article 29(4) of the former Enforcement Decree of the Inheritance and Gift Tax Act. Therefore, the Plaintiff’s assertion on this part is without merit.

3) Judgment on the third argument

A) Facts of recognition

According to the purport of Gap's evidence 3, Eul evidence 7, Eul evidence 2, Eul evidence 4 through 7, Eul evidence 8-1, 2, Eul evidence 9-1 through 4, and the whole pleadings, the defendant seems to hold 200 billion won of non-party company's shares as of December 31, 2006 by referring to the shareholders' holding and change in the shareholders' shares which were able to be identified as the basis for reporting and reporting pursuant to Acts and subordinate statutes 1) from January 1, 2007 to May 4, 207, 107, and 1/700 of the total number of shares issued by non-party company's shares as of May 1, 207 (the "controlling shareholders") and 200 billion won of shares issued by non-party company's shares as of December 31, 206, and 307 shares issued by non-party company's shareholders as of 40 billion won of non-party company's shares (the non-party shareholder's shares).

B) The Plaintiff asserted that the instant disposition was unlawful since the Defendant did not secure the shareholder registry as of May 4, 2007, and did not reflect only the changes in the shares of shareholders holding not less than 5% of the total number of shares issued by Nonparty Company based on the shareholder registry as of December 31, 2006 and did not reflect all the changes in the shares of shareholders holding less than 5% of the total number of shares issued by Nonparty Company. Thus, the instant disposition violated the principle of substantial taxation and the principle of basis taxation, and did not bear the burden of proof as to the requirements for taxation.

However, the following circumstances acknowledged by the evidence and the purport of the entire pleadings, namely, ① Nonparty 2, 3, and 4 (this had been holding not less than 5/100 of the total number of shares issued by the non-party company as specially related persons under Article 200-2(1) of the former Securities and Exchange Act) among the existing shareholders of the non-party company, did not dispose of the shares of the non-party company that were held between January 1, 2007 and May 4, 2007; ② the remaining controlling shareholders, except the non-party 2, 3, 4, and 1, did not hold the same amount of shares issued by the non-party company from January 1, 207 to May 4, 207 to the non-party 207. The remaining controlling shareholders were presumed to have acquired the shares issued by the non-party company from the non-party company 2, 3, and 4, as seen above, to the effect that the non-party company’s shares were transferred to the plaintiff.

Therefore, the plaintiff's above assertion on different premise is without merit.

4) Judgment on the fourth, fifth argument

According to the evidence evidence Nos. 3 and 5, it can be acknowledged that the plaintiff's new shares 147,820 shares of the non-party company that acquired on May 4, 2007 did not have been protected in the Korea Securities Depository. Thus, the above new shares 147,820 shares on the premise that they are shares whose transaction is prohibited due to safeguard, are no longer reasonable.

5) Determination on the fifth argument

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the Act without justifiable grounds, the taxpayer’s intention or negligence is not considered, and the site, error, etc. of the Act does not constitute justifiable grounds that do not cause any breach of duty (see Supreme Court Decisions 9Du3515, Aug. 20, 199; 2002Du10780, Jun. 24, 2004, etc.).

With respect to this case, there was a circumstance that General Rule 39-292 of the former Inheritance and Gift Tax Act provides that “the value per share before capital increase is made for a KOSDAQ-listed corporation on the basis of the day preceding the date on which the right has been extinguished.” However, as long as the calculation of profits under the provisions of Article 29(4) of the former Enforcement Decree of the former Enforcement Decree of the Inheritance and Gift Tax Act, which was newly established on December 30, 2002, explicitly stated that the payment date of stock purchase is based on the payment date, it cannot be deemed that there was a justifiable reason that does not constitute a violation of the duty to report and pay taxes on the sole basis of the Plaintiff’s assertion. Thus, this part of the Plaintiff’s assertion is difficult

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.

[Attachment]

Judges Cho Jong-hee (Presiding Judge)

1) According to Article 200-2 (1) of the former Securities and Exchange Act, a person who comes to hold stocks, etc. of a KOSDAQ-listed corporation (referring to a case where the total number of stocks, etc. held by him and his specially related persons is at least 5/100 of the total number of the relevant stocks, etc.) shall report the holding status and purpose to the Financial Supervisory Commission and the Exchange within five days from that date, and where the holding ratio is changed above 1/100 of the total number of stocks, etc. of the relevant corporation, a person who has a special relation with him/her under Article 94 (1) 3 of the former Income Tax Act (amended by Act No. 9270 of Dec. 26, 2008) and Article 157 (4) 1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21301 of Feb. 4, 2009) shall file a report on the transfer date of stocks of the relevant corporation for the immediately preceding business year.