Cho High Court Decision 2010Du2341 ( October 15, 2010)

The amount paid in excess of net assets at the time of a merger shall not be deemed as the price for business rights acquired at the time of a merger.

Since the Plaintiff, a merged corporation, did not pay for any consideration for the acquisition of business rights to an extinguished corporation at the time of the merger, even if the Plaintiff acquired business rights from the extinguished corporation before the merger, it cannot be deemed that the Plaintiff acquired the business rights of the extinguished corporation with compensation.

2011Guhap1740 Revocation of revocation of revocation of corporate tax rectification

AAAA Bank, Inc.

The Director of the Pacific District Office

September 27, 2012

November 8, 2012

1. The plaintiff's claim is dismissed.

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

The defendant's refusal of correction against the plaintiff on May 6, 2010 shall be revoked in the aggregate of the corporate tax belonging to the business year 2006-2008.

1. Details of the disposition;

A. On June 22, 1968, the Plaintiff was established as the BB World Co., Ltd., and on December 29, 1972, the Plaintiff changed the GG to the CC Credit Credit Guarantee Co., Ltd., and was dealing only with small credit loans based on the installment repayment method, the Plaintiff commenced the business of the GG Credit Credit Guarantee Fund with the authorization of the GG Credit Credit Guarantee Fund on January 1, 1973. Thereafter, on March 1, 2002, the Plaintiff changed the GG to the DG Credit Guarantee Bank, and on September 24, 2010, changed to the AAAAB Bank.

B. On January 17, 1997, the Plaintiff entered into GG with the FF Credit Guarantee Co., Ltd., Ltd. (hereinafter referred to as the “EEEM”) located in POC 0000 of the former OEM during Ansan-si (hereinafter referred to as the “DD Credit Guarantee Co., Ltd.”) to purchase KRW 110,000,000, total shares issued by the company from the FF Credit Guarantee Co., Ltd. (hereinafter referred to as the “DD Credit Guarantee”), and the main contents are as follows.

(Major Contents Omitted)

ODD Credit Depository shall transfer the total shares and assets owned by the Treasury as of January 31, 1997, and the goodwills as of January 31, 1997: Provided, That the Plaintiff and EEPs are transferred in the same shares, each of which shall be 50% of the shares acquired by the Plaintiff (hereinafter referred to as “the shares of this case”).

O The sales price of the instant sales contract was calculated as KRW 000 of the equity capital + KRW 000 of the paid-in capital + KRW 000 of the legal reserve + KRW 000 of the business rationalization reserve + KRW 000 of the voluntary reserve + KRW 000 of the business management premium) and KRW 000 of the management premium.

C. After that, the Plaintiff and EEph wave paid KRW 5.1 billion in the purchase price of the instant stock sales contract, which was finally determined through the process of due diligence on the claims for unrecollectionable and recovery, and acquired shares issued by the DD Credit Depository.

D. In addition, on April 2, 1997, the Plaintiff acquired 000 shares in the process of issuing new shares of DD Credit Depository, and owned 00% of the shares of DD Credit Depository. On August 7, 2000, the Plaintiff acquired 5,000 shares in DD Credit Depository from Switzerland, and acquired 100% of the shares of DD Credit Depository, and merged DD Credit Depository into 1:00 on September 27, 200 (hereinafter “the instant merger”).

E. The Plaintiff appropriated the value of the goodwill acquired at the time of the instant merger as KRW 000 (i.e., the acquisition cost of 000 - the net asset value of 000 won - the net asset value of 200 won in each business year. The Plaintiff depreciated the goodwill acquired by the instant merger as above, but returned the corporate tax base and tax amount from 2000, the Plaintiff excluded the total amount of depreciation of the goodwill from deductible expenses, but on March 26, 2010, requested the Defendant to rectify the corporate tax base and tax amount by including the depreciation cost of 2006-2008 business year, which can be corrected on the ground of the site of the relevant law, in deductible expenses, due to the Defendant’s request for correction of the corporate tax base and tax amount (hereinafter “instant rejection disposition”). However, the Defendant rejected it on May 6, 2010 (hereinafter “instant

F. Accordingly, on July 7, 2010, the Plaintiff filed an appeal against the instant refusal disposition with the Tax Tribunal, which was dismissed on October 15, 2010.

Facts without dispute over the basis of recognition, Gap evidence 1 through 7, and Eul evidence 1 through 3 (if available, including each number), and the purport of the whole pleadings.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff acquired the instant shares through the instant share purchase agreement as part of the instant merger procedure. At the time of purchase, the Plaintiff recognized the business value of the DD Credit Depository, and paid 000 won [the acquisition value of the instant shares - 000 won - net asset value of DD Credit Depository 000 won) x50% (share acquisition ratio) higher than the net asset value on the account books of the DD Credit Depository. However, in the case of GG Credit Depository, the Plaintiff was unable to establish branches and sub-branches, excluding the main place of business due to strict regulations on regions, and thus, it was possible to expand business networks in Gyeonggi-do by combining DD Credit Depository located in Gyeonggi-do. ② (B) In the case of GG Credit Depository, there was a restriction on the capital stock etc., but in the case of the DD Credit Depository, the Plaintiff provided additional benefits for the establishment of the branch, etc., and the Plaintiff’s additional D Credit Depository was unlawful, i.e., the Plaintiff’s additional D Credit Depository was established for the following merger.

B. Relevant statutes

Paper in the Appendix

C. Determination

1) According to Article 24(1)2 (a) and (4) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 2184, Jun. 8, 2010; Presidential Decree No. 2067; Presidential Decree No. 20750, Feb. 29, 2008; Presidential Decree No. 20707; Presidential Decree No. 2467, Feb. 29, 2008; the Plaintiff’s acquisition of new stocks for the purpose of acquisition of new stocks for the purpose of 0G 207; Presidential Decree No. 207; Presidential Decree No. 37555, Feb. 1, 2009; Presidential Decree No. 207; Presidential Decree No. 24777, Feb. 1, 2007; Presidential Decree No. 207577; Presidential Decree No. 24777, Feb. 1, 2009).

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and it is so decided as per Disposition.