Plaintiff 1 and one other (Law Firm Oyun Law, Attorneys Park Sung-sung et al., Counsel for the plaintiff-appellant)

Sung Dong Tax Office et al.

March 8, 2013

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

① The imposition of gift tax as indicated in the Attachment of August 1, 201 against Plaintiff 1 and the imposition of penalty tax as indicated in the attachment of February 8, 2013 by the head of Seongdong-dong Tax Office, which was made against Plaintiff 1, and the imposition of penalty tax as indicated in the attachment of the Attachment of the Attachment of the Attachment of the same Act, and the imposition of penalty tax as stated in the attachment of the Attachment of the same Act, which was made by the head of Dongjak-dong Tax Office against Plaintiff 2, respectively, shall be revoked.

1. Details of the disposition;

A. On November 2, 2005, a KOSDAQ-registered corporation, entered into an agreement with the content that “Arex shall purchase 420,000 shares of the company’s 420,000 shares from the shareholders of the Marex and distribute them to the shareholders of the Marex by issuing new shares with capital increase with the third party allocation method.”

B. The Sixex held a board of directors on the same day, and passed a resolution to issue capital increase to the effect that “the issuance price per share 3,59,92 shares, 1,750 won (the rate of 9.79% shall be applied to the value calculated under Article 57 of the Regulations on Issuance, Public Disclosure, etc. of Securities) of the issue price per share, and the stock price payment method shall be implemented on November 11, 2005 (the payment date was changed to December 2, 2005) of the share price payment date (the payment date was changed to December 2, 2005).”

C. The Plaintiffs, as well as the shareholders of well-dyingd, participated in the above capital increase with the capital increase and paid KRW 1,750 per share on December 1, 2005, respectively, and Plaintiff 1 and Plaintiff 2 acquired KRW 548,571 per share and KRW 600,000 per share (hereinafter “instant shares”).

D. The Commissioner of Busan Regional Tax Office investigated the change in the shares of the Sinex, and the head of Busan Regional Tax Office shall regard the increase in the shares of the Sinex as the "Inheritance Tax and Gift Tax Act" (amended by Act No. 8828, Dec. 31, 2007; hereinafter the "Inheritance Tax Act") Article 39 (1) 1 (c) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 20621, Feb. 22, 2008) and Article 29 (3) 1 of the same Enforcement Decree of the same Act (amended by Presidential Decree No. 20621, Feb. 2, 2008; referring to the capital increase before the issuance of the shares in this case); from October 27, 2005 to December 1, 2005, the average of 3,634 won per share of the Sinex x 305 won per share x 305 won per share x 20 won per share 】 325 won per share 】 3615 won or 25 won per share.

E. Accordingly, on August 1, 201, the head of Sungdong Tax Office imposed gift tax of KRW 164,338,844 (including additional tax) on Plaintiff 1, and on August 9, 2011, the head of Dongjak District Tax Office imposed gift tax of KRW 181,418,113 (including additional tax) on Plaintiff 2.

F. On September 14, 201, Plaintiff 2 appealed, and filed an objection on September 14, 201. On October 14, 2011, Plaintiff 2 received from the director of the Seoul Regional Tax Office a decision that “the assessment value per share after the capital increase was re-calculated based on the average market price from October 2, 2005 to December 1, 2005, the day immediately before the payment date of the share capital, thereby re-calculated the gift tax base and tax amount.”

G. Accordingly, on August 1, 2011, the Defendants determined the appraised value per share after the capital increase of the instant shares as KRW 2,649, and the Defendants issued a revised and notified each of them to the Plaintiff 1 as gift tax amounting to KRW 49,316,380, and KRW 38,654,210, and penalty tax amounting to KRW 38,654,210, and the head of Dongjak-dong Tax Office as gift tax amounting to KRW 53,939,940, and penalty tax amounting to KRW 42,278,020, respectively.

H. Plaintiff 1 filed an appeal on November 7, 201, but received a decision of dismissal from the Tax Tribunal on August 6, 2012. Plaintiff 2 filed an appeal on January 20, 2012, but received a decision of dismissal from the Tax Tribunal. Plaintiff 2 received a decision of dismissal from the Tax Tribunal on September 17, 2012.

I. As to Plaintiff 2 on February 7, 2013, the head of Seongdong District Tax Office ex officio revoked the imposition of additional tax on Plaintiff 1 on February 8, 2013, and issued a notice of imposition of additional tax on the same day by specifying the type of additional tax and the basis for calculation thereof (hereinafter “each reduced imposition of additional tax”).

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 7, Eul evidence 1 to 10, 13 (including each number), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

(1) The Defendants determined whether to issue shares at a low price as of the base date for appraisal. This is unlawful as it interferes with investors’ reasonable decision-making by causing unexpected tax burdens at the time of decision-making on investment intent and adversely affects the financing of listed corporations. The base date for appraisal to determine whether shares were issued at a third party allocation method should be the date of the resolution of the board of directors to determine the issue price of new shares.

(2) Even if the lower price is determined as of the payment date of shares, it is unclear at the time when the base date of appraisal is the absence of the right, and the tax authority’s standard is not uniform. In addition, the Plaintiffs determined the issue price of shares pursuant to the Financial Supervisory Commission’s “Rules on Issuance and Public Announcement of Securities,” which decided to determine the issue price based on the date preceding the date of resolution of the board of directors in the case of capital increase with shares allocated to a third party. Therefore, the Plaintiffs constitute justifiable grounds for not expecting the return and payment of gift tax based on the payment date of shares, and thus, the imposition of additional tax among each disposition

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) As to gift tax

(A) Article 39(1)1 (c) of the Inheritance and Gift Tax Act provides that where a corporation issues new stocks or equity shares at a price lower than the market price of the new stocks in order to increase capital, a person who is not a shareholder of the corporation concerned shall be deemed to have donated the amount equivalent to the benefits acquired by directly obtaining the new stocks from the corporation concerned. Article 29(3)1 and (4) of the Enforcement Decree of the same Act provides that the benefits shall be calculated by multiplying the number of new stocks by the number of new stocks as of the payment date of the stock price.

Meanwhile, Article 60(1) of the Inheritance and Gift Tax Act provides that the value of property on which gift tax is levied shall be based on the market price as of the date of donation (hereinafter “base date for appraisal”) and the value assessed according to the method of appraisal stipulated in Article 63(1)1 (a) and (b) shall be deemed as the market price. Article 63(1)1 (a) of the Act provides that the stocks of the Association-registered corporation as prescribed by the Presidential Decree shall apply mutatis mutandis to the method of appraisal of stocks traded with the Korea Stock Exchange, and shall be appraised as the average value of the base price of the Association of Securities Business every

(B) In the case of this case, as claimed by the Plaintiffs, when calculating the gift profits based on the payment date of the stock price, there is room for the burden of excessive gift tax to the new underwriter when the share price rise after the resolution of the board of directors and the publication.

① However, the legislative intent of Article 39 of the Inheritance and Gift Tax Act and Article 29 of the Enforcement Decree of the same Act is to impose new shares with a price lower than the market price assessed in accordance with Articles 60 and 63 when new shares are issued for capital increase with a third party allotment method, deeming that the difference between the payment amount of shares and the market price is donated. Therefore, the determination of whether to issue shares should be based on the amount paid for shares. ② Therefore, Article 60(1) of the Inheritance and Gift Tax Act and Article 29(4) of the Enforcement Decree of the same Act stipulate that the value of the property on which the gift tax is levied shall be determined based on the market price as of the date of payment for shares, and it cannot be deemed that the provision for the calculation of the gift profits only is a provision for the calculation of the legitimate payment date of shares. ③ Since the purchaser of new shares loses the value of shares without a resolution of the board of directors on the issuance date of shares, ④ The determination of the price of shares based on the resolution of the board of directors on the issue date of directors's notice method.

(2) As to additional tax

(A) In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under tax law is an administrative sanction imposed under the conditions as prescribed by individual tax law in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and it is unreasonable for the taxpayer to be aware of such obligations, and thus, it is unreasonable for the taxpayer to be reasonably present or to expect the performance of such obligations to the party concerned, and there are justifiable circumstances that make it unreasonable for the taxpayer to be aware of such obligations (see Supreme Court Decision 2003Du4089, Apr. 15, 2005).

(B) It is reasonable to determine whether the stock price is low on the basis of the payment date of the stock price even in the case of capital increase with health class and third party allotment method. The provision on this issue (Article 29(4) of the Enforcement Decree of the same Act) was effective January 30, 2002. The provision on the issuance and public disclosure of securities provides that "stock-listed corporations, etc. may provide capital increase through market price; where a stock-listed corporation, etc. provides capital increase through market price, a stock-listed corporation, etc. may provide capital increase through market price; and where a stock-listed corporation, etc. provides capital increase through market price, the issue price shall be calculated by applying the discount rate set by the stock-listed corporation, etc. to the base price; however, in the case of capital increase through third party allotment method, the discount rate shall be set within 10/100. In order to ensure fairness and transparency of the issue price and subscription procedure, it is different from the provision on the calculation of the gift profits under the Inheritance Tax and Gift Tax Act and the Enforcement Decree.

3. Conclusion

Therefore, each of the dispositions of this case is legitimate, and all of the plaintiffs' claims are dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judges Jin (Presiding Judge) Lee Jin-hun (Presiding Judge)