Seoul High Court 2008Nu28143 (Law No. 23, 2009)

The purchase of land from a person with a special relationship constitutes a wrongful calculation panel.

In the case of transactions lacking economic rationality between a corporation and a person with a special relationship, it constitutes a wrongful calculation panel, which purchased land at a lower price than the market price from a corporation with a special relationship constitutes a wrongful calculation panel.

The contents of the decision shall be the same as attached.

쇠지지300 쇠지지지 3000 지지지 3000 Austria

쇠지지300 쇠지지지 3000 B2

Article 300 gross u300 gross u3000 gross u3000 gross u3000 Seoul High Court Decision 2008Nu28143 decided July 23, 2009

쇠은은 개은은 개은은은 3000 개은은은 3000 아은은은이 이 3000 개이 이 300 개이 30010.

44 44 44 44 44 45 44 444 64 44

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

쇠鹬 쇠鹬 3000 쇠鹬 3000

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

The court below determined, based on its reasoning, that the EE Construction Co., Ltd. (hereinafter referred to as "EE Construction"), which is a contractor for the new construction ofCC or shopping mall, was actually involved in the operation ofCC (hereinafter referred to as "CC"), and that ED was a wife of the EE Construction Representative Director Cho G (hereinafter referred to as the plaintiff's father) and that it exercised its influence on the operation ofCC by performing the audit duties of the E Construction at the time of the instant sales contract, since ED constitutes "a person recognized as exercising its de facto influence on the operation of the relevant corporation" under Article 87 (1) 1 of the Enforcement Decree of the Corporate Tax Act, and since the plaintiff is a relative of ED, the plaintiff also constitutes "a person with a special relationship with CC."

Examining the evidence submitted in light of the records, the above fact-finding and determination by the court below is just and acceptable. Contrary to the grounds of appeal, the court below did not err by violating the rules of evidence or by misapprehending the legal principles concerning the scope of persons with a special relationship.

2. Regarding ground of appeal No. 2

Wrongful calculation means the calculation of a taxpayer’s act of reducing or excluding the tax burden that arises when a taxpayer takes the ordinary rational transaction form by taking the bypassing act, the multi-stage act and other abnormal transaction form, and Article 52 of the Corporate Tax Act provides for the denial of wrongful calculation under Article 52 of the Corporate Tax Act. The purpose of the provision is to ensure fairness in taxation and to prevent tax avoidance by imposing tax by deeming that the taxpayer had income that is objectively reasonable in terms of tax law due to the lack of economic rationality on the grounds that such wrongful calculation with a corporation and a related party is unfair. The determination of whether economic rationality exists should be based on whether the transaction can be deemed normal in light of sound social norms or commercial practices, taking into account the overall circumstances (see Supreme Court Decision 201Du7268, Sept. 4, 2002).

The lower court determined as follows: (a) on the basis of the fact thatCC’s purchase of each of the instant land did not find out the circumstances that it had particularly aggravated managerial financial standing on the basis of the fact that it sold each of the instant land to Plaintiff-typed land at an amount below 1/2 of the acquisition cost of each of the instant land, although it could not be seen that it had particularly aggravated managerial financial standing on the basis of the fact that it sold each of the instant land to Plaintiff-typed land at a low price; and (b) thereby, the Plaintiff-

Examining the evidence submitted in light of the records, this part of the court below's fact-finding and judgment is just in accordance with the above legal principles, and there is no error of violation of the rules of evidence or misapprehension of legal principles in the application of the rules of wrongful calculation.

3. Regarding ground of appeal No. 3

The lower court determined that it was reasonable to calculate the acquisition value by including the value of each land of this case acquired by the Plaintiff siblings in calculating the acquisition value of each land of this case, on the grounds thatCC had intended to remove the building at the time of purchase of 33 large 1,318 square meters and its ground buildings among each land of this case, and to newly buildCCV shopping mall with the Plaintiff’s land with knowledge that the above ground buildings will be removed.

Examining the evidence submitted in light of the records, the above fact-finding and determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the method of calculating the market price under the Corporate Tax Act.

4. Conclusion

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