Seoul Administrative Court 201Guhap6479 ( November 25, 2011)

National Tax Service Review Donation 2010-010 ( November 29, 2010)

It is reasonable to deem that the shares were donated at the time of capital increase offering.

In light of the fact that the donor has a high interest income and that the donor has a large amount of assets, such as real estate, etc., it is insufficient to recognize that the acquisition fund of the instant shares is the Plaintiff’s funds, and it is reasonable to deem that the funds for acquiring shares was donated to her husband at the time of capital increase with no other evidence to acknowledge it.

2011Nu43029 Revocation of Disposition of Imposing gift tax

Park XX

Head of the District Tax Office

Seoul Administrative Court Decision 201Guhap6479 decided November 25, 2011

April 20, 2012

June 8, 2012

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s disposition imposing gift tax of KRW 000 on the Plaintiff on June 1, 2010 is revoked.

2. Purport of appeal

as set forth in the order;

1. Details of the disposition;

A. On May 11, 2006, the 000 shares of the Co., Ltd. (hereinafter referred to as the “instant corporation”) owned by the 00,000 shares (hereinafter referred to as the “instant shares”) were transferred under the name of the Plaintiff.

B. The director of the Central Regional Tax Office, from March 10, 2010 to April 13, 2010, found that the Plaintiff’s spouse participated in the capital increase for consideration of the instant corporation in 2003 and acquired the instant shares at KRW 000 on the ground that the Plaintiff’s title was confirmed to have commenced on May 11, 2006, and notified the Defendant of the relevant taxation data on May 19, 201, by evaluating the taxable value of gift tax in accordance with the supplementary assessment method under the Inheritance Tax and Gift Tax Act, on the ground that the Plaintiff’s title was donated to the Plaintiff.

C. On June 1, 2010, the Defendant issued a disposition imposing gift II 00 won (hereinafter “instant disposition”) on the Plaintiff.

D. The Plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service on October 28, 2010, but the Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination on November 29, 2010.

[Reasons for Recognition] Unsatisfy, Gap evidence Nos. 1 through 3, Eul evidence No. 1.2-1. Each entry, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In light of the following reasons, the disposition of this case, based on the premise that the Plaintiff received a donation from her husband, is unlawful.

1) The instant shares were not donated by BB, from the beginning, to the effect that the Plaintiff acquired the funds from the Plaintiff.

2) Even if the acquisition fund of the instant shares is funds of BB, the Plaintiff’s donation from HanB is not the instant shares but 000 won, which is the subscription fund for capital increase with capital increase, and thus, the subject of gift tax should be deemed as KRW 000.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) Around November 2003, ParkD, who worked as a director of the instant corporation, promised to transfer shares after his participation in the instant corporation’s capital increase to the privateCC, which is a branch director of the instant corporation, and the BB accepted the offer of capital increase to the privateCC, which recommended the privateCCB to raise the capital increase together with its capital increase.

2) On December 9, 2003, HanB remitted KRW 000 to the CivilCC as the subscription fund for the instant corporate shares, and the CivilCC remitted KRW 000,000 including the above KRW 00,000,000 to GaD on the same day.

3) However, ParkD, however, made an offer for the capital increase with capital increase on December 13, 2003 of the instant corporation, with some of the above 00 won, returned 00 won out of the above 00 won to the civilCC, and the civilCC returned 00 won out of the 00 won to the B.

4) Meanwhile, on March 25, 2005, ParkD held 20,000 shares of the instant corporation at the time of resignation from the director of the instant corporation. However, on May 3, 2005, the said 20,000 shares increased by the number of shares to 20,000 shares at the par value of May 3, 2005.

5) On May 31, 2005, ParkD transferred 200 won, among the above 00 won, a transfer was made in the name of 00,000 shares of the corporation of this case, which were owned by it under the name of 200,000 shares of the corporation of this case, and on May 11, 2006, 00 shares of this case, 00 shares were transferred under the name of the Plaintiff, the wife of 20,000 shares of the corporation of this case, which were possessed by a charitable company due to purchase and sale on May 11, 2006.

[Based on Recognition] A-2, 3 evidence, Eul evidence Nos. 2-3, Eul evidence Nos. 3, Eul evidence Nos. 4-1 through 3, Eul evidence Nos. 4-5, Eul evidence Nos. 5, part of the witness of the first island Co., Ltd., and the purport of the whole pleadings

D. Determination

1) Determination on the first argument

As to whether the funds to acquire the shares of this case are the Plaintiff’s funds, the above facts, the evidence as seen above, Eul’s evidence No. 5-2. Eul’s each statement and the whole purport of pleading No. 6, i.e., the following circumstances, i., ① the transfer of KRW 000 to the CivilCC as the subscription fund for the shares of this case by Korea-B to friendly public offering, and there is no evidence to support the Plaintiff’s solicitation of subscription for the shares of this case, and there is no evidence to support that the above KRW 00,00, which was transferred from one B’s passbook’s account, was actually the Plaintiff’s funds, ② the transfer of KRW 200,000,000,000,000,000 won, which was withdrawn from May 17, 200, and each of the above 200,000,000 won, which was deposited from the Plaintiff’s account No. 2,000,000 won,00 won.

2) Determination on the second argument

In light of the following circumstances acknowledged by comprehensively taking account of the above facts admitted and the evidence and the purport of the entire pleadings, it is reasonable to deem that the Plaintiff’s donation from HanB does not constitute KRW 000,00,00,00,00,00,000,000,000,000,000,000 won for subscription to capital increase for capital increase, and as seen contrary to this, the partial entry of evidence No. 6 and the witness of the first instance trial as well as the witness of the first instance trial are likely to believe

A) In light of the fact that Park DoD’s shares 20,000 shares of the instant corporation held at the time of resignation from the director of the instant corporation (the face value of KRW 000) appears to be the total amount of shares held from before Park DoD’s shares issued on December 13, 2003 and shares newly received due to the above shares issued on December 13, 2003; the above 20,000 shares increase by 10 times the number of shares (the face value of KRW 00) only due to the split at face value on May 3, 2005; Park DoD borrowed 20,000 shares under the name of 0,000 shares borrowed from PrivateCC as debt repayment for the outstanding amount; in view of the fact that Park Do’s transfer was made in the name of 0,000 shares under the name of 00 shares issued by PrivateCC, it is reasonable to deem that Park Do’s shares were included at the time of the transfer to 20000 shares.

B) Meanwhile, in light of the fact that the privateCC remitted KRW 000,000, including KRW 000,000, which was remitted from KoreaB, to BD, it used only a part of the above KRW 000 as the subscription fund, and then returned KRW 00,000, which was immediately returned after the above capital increase. However, it is difficult to view that BD acquired KRW 100,000,00, which was remitted by KoreaB to BCC, as a substitute for the repayment of the non-claimed amount of KRW 00,00,00, out of the funds that were remitted from the instant corporation without transferring the stocks to Korea or KoreaB.

C) In light of the fact that the Plaintiff transferred KRW 000 to the CivilCC on December 9, 2003, but received the refund of KRW 000, and thereafter, the transfer of the instant shares was made in the name of the Plaintiff from the 00A, the wife of the CivilCC on May 11, 2006. The time when the Plaintiff was transferred to the Plaintiff was at least two years and five months after the transfer by the Plaintiff, and the instant shares were paid in the name of a debt repayment for the amount repaid out of the said KRW 00,000, which was remitted by Korea-B, it is reasonable to deem that the actual owner of the instant shares was not the Plaintiff but the Korea-B.

D) Moreover, there is no objective data suggesting that Korea-B was allocated 10,000 shares of the instant corporation (in large-scale split, 100,000 shares of the instant corporation) as the subscription fund for the instant corporation’s shares, out of 000 won remitted by Korea-B to Korea CivilCC.

E) The Plaintiff argued to the effect that the Plaintiff should be deemed to have received a donation from the Plaintiff even if the Plaintiff was transferred to the privateCC with the funds of KoreaB when the privateCC and the B from the privateCC were solicited to participate in the capital increase. However, there is no evidence to acknowledge that the Plaintiff would have directly participated in the capital increase when the privateCC and the NAB were solicited to participate in the capital increase. However, as seen in the above argument, there is no evidence to support that the part of the evidence No. 6 and the witness testimony of the first instance court and the witness testimony of the first instance trial would be believed, and otherwise, there is no evidence to support that the Plaintiff would directly participate in the capital increase.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed due to the lack of reason. Since the judgment of the court of first instance is unfair with different conclusions, the defendant's appeal is accepted, and the plaintiff's claim is dismissed, and it is so decided as per Disposition.