[1] The meaning of market price as a standard for determining whether a low-price transfer subject to rejection of unfair calculation constitutes a wrongful calculation

[2] The case holding that "justifiable cause" under Article 40 (1) 2 of the Enforcement Decree of the Corporate Tax Act exists

[1] Article 46 (2) 4 of the Enforcement Decree of the Corporate Tax Act provides that one of the acts of wrongful calculation under Article 20 of the Corporate Tax Act provides that a person with special relationship, such as investors, shall transfer assets below the market price. Article 16-2 of the Enforcement Decree of the same Act (amended by Ordinance of the Ministry of Finance and Economy No. 1866 of December 28, 191) provides that in applying Article 46 of the Enforcement Decree of the same Act, where the market price is unclear, stocks not listed on the Stock Exchange shall be based on the valuation by applying mutatis mutandis the provisions of Article 5 of the Enforcement Decree of the Inheritance Tax Act concerning the appraisal of securities. The market price in the above provision refers to an objective

[2] The case holding that, under Article 40 (1) 2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 194), since a corporation transfers assets to an unrelated party at a price below the arm's length price (the price within the scope of adding 30/100 of the market price at the market price or deducting 30/100 of the market price) or purchases assets at a price above the arm's length price, the amount deemed to have been actually donated among the difference shall be deemed to have been a donation not included in deductible expenses under Article 18 of the Corporate Tax Act, even if the purchase price of stocks from another company is higher than the arm's length price, the above stock transaction shall be deemed to have a justifiable reason for the domestic corporation to purchase the above stocks in light of the fact that it is a transaction conducted under special circumstances in which it returns the investment amount to a foreign joint venture investment corporation and acquires the right of management in a lump sum.

[1] Article 20 of the Corporate Tax Act, Article 46 (2) 4 of the Enforcement Decree of the Corporate Tax Act, Article 16-2 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1866 of December 28, 191) / [2] Article 18 (1) of the Corporate Tax Act, Article 40 (1) 2 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of December 31, 1994)

[1] Supreme Court Decision 92Nu1971 delivered on October 27, 1992 (Gong1992, 3333), Supreme Court Decision 92Nu913 delivered on February 12, 1993 (Gong1993Sang, 1021), Supreme Court Decision 94Nu8013 delivered on December 23, 1994 (Gong1995Sang, 714) / [2] Supreme Court Decision 84Nu365 delivered on December 11, 1984 (Gong1985, 176), Supreme Court Decision 92Nu18320 delivered on May 25, 1993 (Gong193Ha, 1927)

Mata Co., Ltd. (Attorneys Kim Chang-soo et al., Counsel for the defendant-appellant)

Head of the tax office

Busan High Court Decision 94Gu576 delivered on November 14, 1996

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

1. On the first ground for appeal

Article 46 (2) 4 of the Enforcement Decree of the Corporate Tax Act provides that one of the methods of wrongful calculation under Article 20 (1) of the Corporate Tax Act provides that a person with a special relationship, such as an investor, transfers assets below the market price, and Article 16-2 of the Enforcement Decree of the same Act (amended by Ordinance of the Ministry of Finance and Economy No. 1866 of Dec. 28, 191) provides that in applying Article 46 of the Enforcement Decree of the same Act, where the market price is unclear, stocks not listed on the Korea Stock Exchange shall be based on the value assessed by applying mutatis mutandis the provisions on appraisal of securities under Article 5 of the Enforcement Decree of the Inheritance Tax Act. Thus, the market price in the above provision

According to the reasoning of the judgment below, the court below concluded a joint venture agreement between the non-party 1 corporation and the non-party 4 corporation (the non-party 1 corporation) to establish the non-party 1 corporation (the non-party 4 corporation) as to the non-party 1 corporation's shares shares, and the non-party 4 corporation's shares were transferred to the non-party 5 corporation's shares to the non-party 5 corporation's shares to the non-party 1 corporation's shares to the non-party 90 billion won. The non-party 5 corporation's shares were transferred to the non-party 4 corporation's non-party 1 corporation's shares to the non-party 4 corporation's shares to the non-party 90,000 won. The non-party 9 corporation's shares were transferred to the non-party 2 corporation's non-party 4 corporation's shares to the non-party 90,000 won shares were transferred to the non-party 4 corporation's shares to the non-party 2 corporation's shares.

In light of the records and relevant Acts and subordinate statutes, the above fact-finding and judgment of the court below are justified, and there is no error of law such as incomplete deliberation or misunderstanding of legal principles. There is no reason to discuss.

2. On the second ground for appeal

According to Article 40 (1) 2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994), the amount deemed to have been actually donated out of the difference shall be deemed to be a donation not included in deductible expenses under Article 18 of the Corporate Tax Act by transferring the asset at a price below the arm's length price (the price within the range of 30/100 added at the market price or at a price below 30/100 below the arm's length price) or by purchasing the asset at a price above the arm's length price without just cause to a person who has no special relationship. Thus, even if the purchase price of the stock of this case by the Plaintiff Company is higher than the arm's length price, it is reasonable to view that the purchase price of the stock of this case is a transaction made under special circumstances as seen earlier, and therefore, the provision of the donation in deductible expenses cannot be applied to the purchase of the stock of this case by the Plaintiff Company.

The decision of the court below with the same conclusion is just and acceptable, and there is no error in the misapprehension of legal principles, such as the theory of lawsuit, and there is no error in the misapprehension of legal principles. The argument is without merit.

3. Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Sung-sung (Presiding Justice)