Whether the profit is calculated on the basis of the value appropriated for compensating for losses carried forward out of the dividend amount of free share received by capitalizing the assets revaluation reserve of the investment corporation (affirmative)

Since the amount of gratuitous dividend received by an investment corporation by transferring assets revaluation reserve into capital is not equivalent to the value of the assets received without compensation under Article 15 (2) of the former Corporate Tax Act (amended by Act No. 3099 of Dec. 5, 1978), the amount of gratuitous dividend appropriated for compensating for losses carried forward out of the amount of gratuitous dividend should be calculated as profits.

Article 15(2) of the former Corporate Tax Act (amended by Act No. 3099 of Dec. 5, 1978)

Attorney Park Jong-chul, et al., Counsel for the defendant-appellant

Head of Seodaemun Tax Office

Seoul High Court Decision 84Gu845 delivered on April 1, 1985

The appeal is dismissed.

The costs of appeal shall be borne by the plaintiff.

The grounds of appeal are examined.

The court below held that during the business year of 197, the plaintiff's free share amount of KRW 413,739,498, appropriated for compensating for losses carried forward in the previous business year among the amount of KRW 743,130,000, which the non-party company received from the non-party company, the investment corporation, in capitalizing the revaluation reserve pursuant to the Assets Revaluation Act, does not constitute an income from investment as compensation for investment, and the amount of free share of income received from the transfer of the revaluation reserve pursuant to the provisions of Article 15 (2) of the Corporate Tax Act at the time, and the amount appropriated for compensating losses carried forward is calculated as profits, which is reasonable in accordance with the purport of the judgment of return by the party member.

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

Justices Shin Jong-sung (Presiding Justice)