Completion Chemical Co., Ltd. (Law Firm Brew, Attorneys Jeong Sung-chul et al.)

Distribution Tax Office (Government Law Firm Corporation, Attorney Kim Young-jin, Counsel for defendant-appellant)

February 26, 2013

Seoul Administrative Court Decision 2011Guhap22662 decided April 5, 2012

1. All appeals filed by the plaintiff and the defendant are dismissed.

2. The costs of appeal shall be borne by each party.

1. Purport of claim

Each disposition of KRW 3,585,798,310, and corporate tax of KRW 420,154,080 for the business year of April 8, 2010, imposed by the Defendant against the Plaintiff for the business year of 2001, shall be revoked.

The Defendant’s imposition of securities transaction tax of KRW 32,266,210 on December 3, 2004 against the Plaintiff shall be revoked.

2. Purport of appeal

A. The plaintiff's purport of appeal

The part of the judgment of the court of first instance against the plaintiff shall be revoked. The imposition of securities transaction tax of KRW 32,266,210 on December 3, 2004 by the defendant against the plaintiff shall be revoked.

B. The defendant's purport of appeal

The part against the defendant in the judgment of the first instance shall be revoked, and the plaintiff's claim corresponding to that part shall be dismissed.

1. Quotation of judgment of the first instance;

The court's reasoning concerning this case is the same as the reasoning of the judgment of the court of first instance, except for the dismissal or addition as stated in the following Paragraph (2). Thus, the court's reasoning is cited as it is in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Parts to be removed or added;

(4) On June 11, 2010, an objection was filed against the director of the Seoul Regional Tax Office on June 11, 2010, but the said objection was dismissed on July 201, and the Plaintiff added “in addition.”

Part 3 of the judgment of the court of first instance is "Evidence 1, 4, and 5 of the judgment of the court of first instance" with "Evidence 1 through 5 of the judgment of the court of first instance."

In addition, the 4th sentence of the first instance court, the 17th to 20th sentence are as follows.

2) Part of the securities transaction tax of this case

The actual acquisitor of the instant shares following the first transfer is not the Plaintiff but the acquisition of the instant shares. Therefore, the imposition of the instant securities transaction tax on the premise that the actual acquisitor of the instant shares is the Plaintiff is unlawful.

Even if the actual acquisitor of the instant shares is deemed the Plaintiff, the Defendant assessed the instant shares in accordance with the supplementary assessment method of the Sub-Definition of the Inheritance Tax and Gift Tax Act, and DNA constitutes a corporation with deficits under Article 14(2) of the Corporate Tax Act continuously from the business year immediately preceding the business year in which the base date of appraisal falls within three years before the business year in which the base date of appraisal falls, and thus, the instant shares are not subject to the premium rate. If the subject of exercising voting rights to the instant shares is deemed a title trustee, the four persons, including Nonparty 5, the title trustee, etc., are not included in the “largest Shareholder, etc.,” subject to the premium rate by taking into account the management rights of the Plaintiff and Nonparty 10, and thus, the maximum shareholder, etc. should be deducted. The Defendant’s share assessment at the time of June 27, 2001 without properly reflecting the enormous cumulative deficits as above, and thus, cannot be deemed an objective assessment of the instant shares.

In the 6th sentence of the first instance court, the first instance court's 10th sentence "(based on recognition) is as follows: 4, 7, 9, 11, 13, and 14."

In Part 9, Part 12, the following shall be added to the court ruling of the first instance.

In addition, the defendant asserts that the disposition of this case is based on the name transfer, which was confirmed in the judgment in a lawsuit under the Administrative Litigation Act, and the exclusion period of imposition is from July 31, 2009 to July 31, 2010, which is one year after the date of termination of the administrative litigation.

Article 26-2 of the Framework Act on National Taxes provides that, in the case of a judgment on litigation under the Administrative Litigation Act, a decision of correction or other necessary disposition may be made according to the relevant judgment before one year elapses from the date the judgment becomes final and conclusive, and that, in the case of paragraph (3) of the above Article 26-2 of the Framework Act on National Taxes, the decision of correction or other necessary disposition may be made within one year from the date the judgment becomes final and conclusive, the disposition of the nominal lender may be revoked and the decision of correction or other necessary disposition may be made to the person who actually

The head of the tax office of North Daegu imposed and notified the corporate tax, etc. for the business year of 2001 by applying the provisions of the Corporate Tax Act, etc., to DNA oil acquired by absorbing DNA on the ground that DNA had purchased the stocks of this case at a low price, and that DNA had transferred them at low price, and the acquisition oil was subject to imposition and notification of corporate tax, etc. for the business year of 2001 by applying the provisions of the Evaluation of Wrongful Acts and subordinate statutes under the Corporate Tax Act. On April 23, 2008, the above court filed an administrative suit seeking revocation of the above disposition on the ground that DNA cannot be deemed as the actual acquisitor of the stocks of this case. On January 16, 2009, the head of the tax office of North Daegu filed an appeal against the above judgment, but revoked the above disposition ex officio, and the completion oil was withdrawn and the above lawsuit was terminated.

Article 26-2 (2) and (3) of the Framework Act on National Taxes provides that necessary measures may be taken within one year from the date when the judgment on administrative litigation becomes final and conclusive, taking full account of the above facts and the purport of oral pleadings. Since the above Seoul Administrative Court Decision No. 2008Guhap17387, the lawsuit is revoked ex officio after the first instance court Decision and the lawsuit is terminated, and the judgment has not become final and conclusive. (2) The above provisions of the Framework Act on National Taxes were established when the procedure of litigation such as a request for administrative appeal or administrative litigation on taxation is delayed for a long period, and thus the decision or ruling cannot be seen as being made after the expiration of the exclusion period of taxation, and thus, it cannot be seen that the above decision or the decision of the Seoul Administrative Court No. 208 Daegu District Court No. 270, Jun. 24, 2010 cannot be seen as being revoked ex officio or ex officio revocation of the decision or decision of the Supreme Court No. 260, Mar. 24, 201010>

In addition, the 9th trial decision of the court of first instance, the 12th to 16th trial are as follows.

2) Disposition of imposition of securities transaction tax of this case

A) Whether the Plaintiff actually acquired the instant shares

As seen above, it is reasonable to view the actual acquisitor of the instant shares following the first transfer as the Plaintiff. As such, the Plaintiff’s assertion on this part is without merit, which is premised on the actual acquisitor of the instant shares, not the Plaintiff but the Plaintiff.

B) Whether the assessment methods of the instant shares are appropriate

Article 63 (3) of the Inheritance Tax and Gift Tax Act shall be added to △△△△△△△ in the application of paragraphs (1) 1 and (2) of the same Article and Article 60 (2) of the same Act, while 20/100 (10/100 in cases of small and medium enterprises prescribed by Presidential Decree) of the value appraised in accordance with paragraphs (1) 1 and (2) of the same Article or the value recognized in accordance with Article 60 (2) shall be added to the value (10/100 in cases of small and medium enterprises prescribed by Presidential Decree) where the largest shareholder, etc. holds more than 50/100 of the total number of outstanding stocks, etc. of the relevant corporation, 30/100 (15/100 in cases of small and medium enterprises prescribed by Presidential Decree) shall be added to △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△ shall be excluded.

Meanwhile, Article 14(2) of the Corporate Tax Act provides that “The total amount of losses of a domestic corporation for each business year exceeds the total amount of earnings for the business year during which the total amount of losses incurred during the business year exceeds the total amount of earnings for the business year.”

In light of the above facts, the DNA evidence Nos. 12-1 and 2 cannot be deemed as falling under a corporation with losses under the provisions of Article 14 (2) of the Corporate Tax Act continuously from the business year which ends within three years before the business year in which the evaluation base date belongs, and there is no other evidence to acknowledge it. However, in full view of the overall arguments in the evidence Nos. 11 and 13 (including the serial numbers) of the company A, DNA must pay corporate tax of KRW 8,680,021 in the business year 198, and 12,769,820 in the business year 200, respectively. According to the above facts, since it cannot be deemed that the total amount of losses belonging to the business year 198 and 200 business years prior to the business year in which the evaluation base date belongs, it cannot be deemed as falling under the Plaintiff’s share evaluation method under the premise that the Plaintiff’s share was not subject to cumulative deficits under the provisions of Article 14 (2) of the Corporate Tax Act for 20 years prior to the business year in which belongs to the appraisal date.

In addition, as seen earlier, the Plaintiff is deemed to have become a real subject to the exercise of voting rights by acquiring the instant shares from Nonparty 1, etc. with a special relationship under Article 63(3) of the Inheritance Tax and Gift Tax Act at the time of the first transfer. As such, the Plaintiff’s assertion that the Plaintiff is not included in the “large shareholder, etc.” subject to a premium increase assessment taking into account the management rights because four persons, such as Nonparty 5, etc. merely a title trustee, are not the subject of the exercise

3. Conclusion

Therefore, the part of the claim of this case which seeks revocation of the imposition disposition of each of the securities transaction tax of this case is justified, and the part which seeks revocation of the imposition disposition of the securities transaction tax of this case is justified, and the judgment of the court of first instance is just, and it is so dismissed, and it is so decided as per Disposition.

Judicial Enforcement Decree of Judges (Presiding Judge)