Whether the gift tax is subject to where one of the joint transferors receives the transfer proceeds in excess of his/her share;

Where one of the transferor receives the transfer proceeds in excess of his/her own shares, the initial disposition that deemed a donation of the transfer proceeds in excess of the normal shares from another transferor having a special relationship is unreasonable by a ruling that excessive the situation in which the transfer was made and the content of the actual transfer contract is determined.

Article 31 of the Inheritance Tax and Gift Tax Act

1. The Defendant’s imposition disposition of KRW 395,213,590 against the Plaintiff on August 18, 2005 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the instant taxation disposition

A. The KOO and the Plaintiff were shareholders of the non-party 10,000 shares of the non-party 20,000 shares of the company as the shareholders of the non-party 20,000 shares, and the Plaintiff owned 50,000 shares of the company as the shareholders of the non-party 20,000 shares.

B. On January 28, 2004, the Plaintiff entered into a contract with Nonparty △△△△ Co., Ltd. (hereinafter “△△△△△”) to transfer all the shares and management rights of the said mutual savings bank at KRW 5 billion (hereinafter “instant contract”) and reported the tax amount as follows.

Transferors

Transfer Value (won)

Acquisition value (cost)

Necessary expenses (won)

Transfer margin (won)

Details of reports (won)

xO

3,000,000,000

(6,000 per share)

2,699,615,000

(5,399 per share)

277,500,000

2,885,000

Transfer income tax 1,834,650

Securities Transaction Tax 15,000,000

MaO (Plaintiff)

2,000,000,000

(20,000 per share)

2,750,755,000

(25,404 per share)

-

-540,400,000

C. However, after the Defendant denies both the above transfer value and acquisition value as reported by the Plaintiff, the transfer value shall be calculated by multiplying the Plaintiff’s share of 5 billion won per share with face value by the transfer value. The acquisition value shall be deemed as 5,000 won per share with the Plaintiff’s share of 5,000 won per share, and the Plaintiff’s transfer value shall be deemed as 1,16,666,67 won remaining after excluding the transfer value of 83,333,3333 won ( = 5,00,000,000 X1/6) calculated by the Plaintiff’s 2 billion won from the calculation of transfer value as stated in the following table, 395,213,590 won per share of 204, 390 won per share with the Plaintiff’s share of 396,666,67,67, and 300,306,360,306, and 306,306,36, etc. of the Inheritance Tax Act).

Transfer Value (won)

Acquisition value (cost)

taxation

833,333,33

(500,600,000 X 100

500,000,000

Transfer Income Tax: 36.687.930 won

No. 395,213,590 won

D. The plaintiff filed a request for a judgment with the National Tax Tribunal to revoke the above taxation disposition, but the National Tax Tribunal dismissed the plaintiff's request on June 30, 2006.

Facts without any dispute over recognition, Gap evidence 1-2, Eul evidence 2-1, 2-2, Eul evidence 3-4, the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff sold the entire shares and managerial rights of the mutual savings bank of this case to △△△△△△△, along with the KOO, and the Plaintiff and KOO agreed with the purchaser on the sales price of the mutual savings bank of this case at the end of the consultation with the purchaser, and the KOO entered into the contract of this case. Therefore, it is different from the fact that the KO transferred the entire amount to the Plaintiff for the convenience of the transaction, and the KOO gave a donation to the Plaintiff. Thus, the disposition of this case is unlawful.

(b) Fact of recognition;

(1) The Plaintiff initially owned 450,151 shares (total face value of KRW 2,250,755,000) equivalent to 42.61% of the total outstanding shares of the mutual savings bank of this case (total face value of KRW 5,000) and the representative director. The Plaintiff was a major shareholder and the representative director, who held 39,923 shares of the mutual savings bank of this case (total face value of KRW 199,615,00) as the external third village of the Plaintiff.

(2) However, the above mutual savings bank was designated as an insolvent financial institution by the Financial Supervisory Commission, and its business was suspended from February 20, 2002 to May 30, 2002. On April 17, 2002, the bank decided to reduce the capital free of charge for 100% of the outstanding shares by opening a temporary general meeting of shareholders on April 17, 2002, and decided to newly increase the amount of 50,000 shares with face value of 60,000 shares at a board of directors on the same day.

(3) On April 29, 2002, according to each of the above resolutions, the existing shares of the mutual savings bank of this case were retired by 100%, and 3 billion won was paid for capital increase. At the time of the above capital increase, the remaining shareholders renounced all of the subscription of new shares. However, 50,000 shares were invested in 2.5 billion won, and 50,000 shares were additionally invested by the Plaintiff.

(4) Since then, the Plaintiff and the KOO decided to sell the said mutual savings bank and collect the investment money, and the purchaser was in physical condition. Before entering into the instant contract with the △△△△△, the Plaintiff and the KOO agreed to withdraw the investment money. However, the contract was terminated every time since it did not obtain approval from the Financial Supervisory Commission.

(5) The Plaintiff consistently took the position that the Plaintiff, including 450,151 shares of capital free of charge during the above contract process, would sell 3 billion won even if it was 3 billion won in light of the amount of capital invested in the mutual savings bank of this case (total amount of KRW 2,750,755,000 + KRW 2,250,755,000 + KRW 500,000 + KRW 200,000 per share, assessed the price per share above the KO and received at least KRW 2 billion from the KOO. Meanwhile, the KO accepted the Plaintiff’s demand and invested at the request of the Plaintiff, and the KOO was 19,615,000 won + KRW 2,500,000 in total + KRW 2,500,000 in total,00 in total, at the time of having received the demand of the Plaintiff and the purchaser of the instant mutual savings bank of this case.

(6) Even at the time of the instant contract, between the △△△△△△△ and the Plaintiff, the buyer, the △△△△△△△△ and the seller, the KRW 3 billion, and the Plaintiff’s share price with the KRW 2 billion, set at KRW 600,000,000,000,000 for shares and the purchase price for management rights. However, the share acquisition drafted at the time did not state in the agreement that the purchase price for each purchase price for the Plaintiff was separately

(7) Meanwhile, after receiving the instant sales amount as one’s passbook, the KO transferred the instant sales amount to the Plaintiff immediately, KRW 1.89 million.

Evidence Nos. 3-1 to 8-2, Evidence Nos. 5-1 to 7-4, each entry of Evidence Nos. 5-1 to 7-4, witness Aa, bbb, and the purport of the whole pleadings

C. Determination

(1) As seen above, the Plaintiff initially owned 450,151 shares of the mutual savings bank of this case (total amount of KRW 2,250,75,00) and was subject to reduction of capital without compensation. In the process of transferring shares, the Plaintiff was the representative director of the mutual savings bank of this case. The Plaintiff was the representative director of the mutual savings bank of this case. The purchase price of KRW 2,000 is an amount which actually falls short of the Plaintiff’s investment amount, and the KO invested KRW 2,50,000 in the capital increase for the purpose of examining the mutual savings bank of this case. 3 billion, the investment amount of KRW 3,00,000 was sufficient to recover the investment amount even if considering the value of the old shares received without compensation, 3,000,000,000 won was 63,000,0000 won, and 6,0000,000 won was 63,000,000 won prior to the transfer price.

(2) Ultimately, the instant taxation disposition based on the premise that the transfer value of the Plaintiff’s shares is KRW 833,33,333 is illegal, and the Plaintiff’s assertion pointing this out is with merit.

3. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case is reasonable, and it is so decided as per Disposition by the assent of all participating Justices.