It is not allowed to seek cancellation of the disposition without specific proof or recommendation.

It is not allowed to seek revocation of disposition by asserting that it is irrelevant to economic concentration or the purpose of evading gift tax without any specific assertion or proof on the requirements of Article 48(2)2 of the Inheritance Tax and Gift Tax Act is beyond the scope of interpretation of the provision.

2013Guhap609 Revocation of Disposition of Imposition of Gift Tax

AAA Institute of Education for a school foundation

Head of the Office of Government

October 15, 2013

November 19, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of the gift tax belonging to the year 2001 against the Plaintiff on October 4, 201 and the imposition of the gift tax belonging to the year 2002 shall be revoked.

1. Details of the disposition;

A. On August 28, 2001, the Plaintiff concluded a sales contract with a non-party BB agent corporation in the name of a school juristic person AAAAAAAAAAC Co., Ltd. to acquire some of 6,049 square meters of land 18-9 square meters (the land was replaced by 461-33, 461-44, the same later; hereinafter referred to as “instant land”) in the name of the basic property for profit-making (hereinafter referred to as “instant sales contract”).

B. After that, the Plaintiff invested the trade name on March 17, 2006 to the non-party CCC Co., Ltd. (hereinafter referred to as the "D Co., Ltd."), and the non-party Co., Ltd. (hereinafter referred to as the "non-party Co., Ltd.") completed the registration of ownership transfer on the land of this case on January 31, 2002 and carried on the business of manufacturing teaching materials and publishing them as its main business.

C. On December 31, 2001, the total number of outstanding shares as of December 31, 2001 of the non-party company (EE: 118,000 won (e.g., face value 10,000 won). Among them, the Plaintiff acquired 117,596 shares (9.66%) from E, 104 shares (0.09%) from E, and the non-party HaF acquired and held 100 shares (0.08%) from 123,00 shares (on December 31, 2002, the total number of issued shares as of 123,00 shares (e.g., face value 10,000 shares) from among them, and owned 5,00 shares issued by the Plaintiff after additional acquisition of 122,596 shares (9.67%) from 202.

D. At the time of the establishment of the Plaintiff, the above originalE is a son of the HongG, the chief director of the board of directors, and the FF is the spouse of the original E.

E. The Board of Audit and Inspection notified the Defendant that in 2001 and 2002, the Plaintiff would additionally collect gift tax on the value of the property used by Nonparty Company to acquire more than 5/100 of the total number of issued and outstanding shares of Nonparty Company, with respect to the holding of 9.66%, and 9.67% shares as of the end of each business year by acquiring the shares of Nonparty Company 117,596 (OOO on acquisition value), 5,000 shares (OOO on acquisition value).

F. On October 4, 2011, the Defendant deemed that the value of the property used by the Plaintiff to acquire more than 5/100 of the total number of issued and outstanding shares of the non-party company was donated in accordance with the above request for correction, and notified the Plaintiff of the correction of the KRW OO of the gift tax for 2001 and KRW OO of the gift tax for 202.

G. On December 29, 201, the Plaintiff appealed and filed a request for examination with the Board of Audit and Inspection on December 29, 201, but was dismissed on November 15, 2012.

[Ground of recognition] Facts without dispute, Eul evidence Nos. 1 through 6, Eul evidence No. 7-1, 2, Eul evidence Nos. 8 and 9, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) After the conclusion of the instant sales contract, the Plaintiff came to know that it was impossible for the Plaintiff to acquire the instant land directly pursuant to the Taeduk Science Complex Management Act, and considered that it was reasonable to continue to engage in profit-making business even through the establishment of and investment in the non-party company. Therefore, the Plaintiff’s acquisition of the shares of the non-party company should be deemed to be substantially

2) In light of the aforementioned developments leading up to the acquisition of shares, it can be confirmed that the Plaintiff did not have a purpose of evading economic concentration or gift tax, and thus, the instant disposition by the Defendant, contrary to the principle of proportionality, is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

C. Determination

1) Whether the Plaintiff’s acquisition of shares of the non-party company can be deemed a substantial acquisition of real estate

However, even if the Plaintiff’s acquisition of the shares of the non-party company was derived from the purpose of evading the restriction on the requirements for the approval of occupancy under Article 10 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 18039 of Jun. 30, 2003), such circumstance alone does not differ from the acquisition of real estate in substance, and thus does not constitute a ground for excluding the application of Article 48(2)2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002). Accordingly, the Plaintiff’s assertion in this part is without merit.

2) Whether the principle of proportionality is violated

Under the principle of no taxation without law, the requirements for taxation, non-taxation, or tax reduction or exemption shall be avoided, and the interpretation of tax laws and regulations shall not be extensively interpreted or analogically interpreted without reasonable grounds (see Supreme Court Decision 2008Du11372, Aug. 20, 2009).

However, the proviso of Article 48 (2) 2 of the former Inheritance Tax and Gift Tax Act provides that "in a case where there is no purpose of "the concentration of economic power or the deprivation of gift tax," which is already claimed by the plaintiff, (i) a faithful public interest corporation, etc. (ii) a public interest corporation, etc. which is not in a special relationship with a large enterprise group under the Monopoly Regulation and Fair Trade Act, and (iii) a domestic corporation, etc. which is not in a special relationship with a large enterprise group under the Monopoly Regulation and Fair Trade Act, shall be excluded from the subject of gift tax if the competent Minister deems it necessary to efficiently carry out its business objectives, such as a public interest corporation, etc.

Therefore, the plaintiff's assertion on this part is without merit.

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.