Seoul Administrative Court-2017-Gu Partnership-86804 ( November 01, 2018)

Judgment on the requirement of qualified division

There is no need to hold shares of a divided corporation until the end of the business year in which the registration date of the division falls, and the division in this case is legitimate.

Article 46 (Taxation on Divided Corporations, etc. upon Division)

2018Nu73562 Revocation of Disposition of Corporate Tax Imposition

AA

a) the Director of the Tax Office

May 3, 2019

June 28, 2019

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The defendant on April 13, 2015, with respect to the plaintiff on April 13, 2015, the corporate taxx members (including additional taxes) of the corporate taxx (including additional taxes) for the

The imposition disposition shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of the reasons for the judgment of the first instance;

The reasons to be stated in this judgment are as stated in the judgment of the court of first instance, in addition to the following parts and the parts to be determined additionally in Paragraph (2). Therefore, this Court shall accept them in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Part 3 through 20 of the judgment of the court of first instance shall be written in accordance with the Act and subordinate statutes written in the attached Form 19 of this Court.

2. Additional determination

A. Determination as to whether the operating period of the divided business portion should be at least five years

1) Parties’ assertion

The defendant asserts that Article 46 (2) 1 of the former Corporate Tax Act provides that "a domestic corporation that has continued to operate a business for not less than five years as of the registration date of the division of an independent business part which can operate a business by dividing the business part which is the requirement under item (a) shall be the requirement for qualified division, so it is reasonable to interpret that the operation period of the divided business part shall be not less than five years. In this regard, the plaintiff asserts that the operation period of the divided business part shall be more than five years pursuant to Article 46 (2) 1 of the former Corporate Tax Act is not a "domestic corporation which is divided" but a "business

2) Determination

In light of the principle of no taxation without law, the requirements for taxation, non-taxation, or tax exemption, and the interpretation of tax laws shall be strictly interpreted in accordance with the text of the law, barring any special circumstance, and shall not be extensively interpreted or analogically interpreted without any reason (see, e.g., Supreme Court en banc Decision 2000Du7131, Mar. 15, 2001). However, Article 46(2)1 of the former Corporate Tax Act provides that "a domestic corporation that has continued to operate a business for not less than five years as of the registration date of a division meeting all of the following requirements, and that "a domestic corporation that has continued to operate a business for not less than five years" provided for in subparagraph 1 of the same Article shall be construed as "a domestic corporation" in accordance with the text of the Act, so the defendant's argument is without merit.

B. Determination as to whether a divided corporation should hold stocks by the end of the business year which includes the registration date of the division

1) Parties’ assertion

The defendant asserts that Article 46 (2) 2 of the former Corporate Tax Act provides that shareholders of a divided corporation, etc. shall hold "stocks" until the end of the business year in which the registration date of the division falls, and that the "stocks" of the above provision should be interpreted as including not only the stocks of the corporation established through division but also the stocks of the divided corporation. Accordingly, the plaintiff asserts that the main sentence of Article 14 (1) 1 (b) of the former Enforcement Decree of Corporate Tax Act provides that "the portion related to the holding of stocks, etc. is excluded."

2) Determination

The main sentence of Article 14(1)1 (b) of the former Enforcement Decree of the Corporate Tax Act provides that in cases of stocks under Article 16(1)6 of the Corporate Tax Act, where all the requirements under Article 46(1)1 and 2 of the Corporate Tax Act are met, the appraisal of the value of stocks shall be based on the previous book value, and the portion related to the holding of stocks in general and subparagraph 2 shall be excluded. Thus, the defendant's assertion is without merit since the shareholder of a divided corporation, etc. holds stocks of a divided corporation until the end of the business year in which the registration

3. Conclusion

The plaintiff's claim of this case is accepted on the grounds of its reasoning. The judgment of the court of first instance is just with this conclusion, and the defendant's appeal is dismissed as it is groundless.