A. Whether Article 117-2(1) of the Enforcement Decree of the Corporate Tax Act, which provides for the method of calculating the amount of liquidation income in cases of combined shares, violates the principle of no taxation without law (negative)

(b) Whether Article 117-2(1) of the Enforcement Decree of the Corporate Tax Act shall apply in cases where the acquisition and merger of the combined shares are made over or before the enforcement date of the Corporate Tax Act (Presidential Decree No. 9699, Dec. 31, 1979) (affirmative)

C. Whether the court takes into account the provisions of the General Rules amended for the issues prior to the amendment of the General Rules of the National Tax Service (affirmative)

A. The provision of Article 117-2 (1) of the Enforcement Decree of the Corporate Tax Act, which stipulates that the acquisition value of combined stocks under Article 117-2 (1) of the Enforcement Decree of the Corporate Tax Act shall be deemed as a merger subsidy and the amount of liquidation income under Article 43-2 (3) of the same Act shall not be deemed as a violation of the principle of no taxation without the law by prescribing new legal matters beyond the scope of "matters necessary for the calculation of liquidation income amount" under Article 44 of the same Act, since the acquisition value of combined stocks shall not be deemed as a violation of the principle of no taxation without the law by stipulating new legal matters in excess of the scope of "matters necessary for the calculation of liquidation income amount" under Article 44 of the same Act.

B. In light of Paragraph 2 of the Addenda of the Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 9099 of Dec. 31, 1979), Article 117-2 (1) of the Enforcement Decree of the same Act shall apply even if the acquisition of the combined shares was made before and after the enforcement date of the Enforcement Decree.

C. The general rules of the National Tax Service’s basic rules are nothing more than those of the administrative rules that instruct the criteria for and enforcement of tax-related Acts interpretation within the tax authority, and thus, it cannot be said that the court took into account the provisions of the amended basic rules concerning all matters before the amendment of the basic rules.

(a) Article 43(3) of the Corporate Tax Act, Article 117-2(1)(b) of the Enforcement Decree of the same Act, Article 117-2(1)(c) of the Addenda of the same Enforcement Decree;

Supreme Court Decision 87Nu55 Decided July 25, 1989

[Defendant-Appellant] Plaintiff 1 et al., Counsel for defendant-appellant

Head of the Cleanness Tax Office

Seoul High Court Decision 85Gu792 delivered on April 30, 1987

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

1. Article 43(3) of the Corporate Tax Act provides that the amount of liquidation income through a merger shall be the amount obtained by adding the total amount of equity capital as of the date of the registration of the merger to the total amount of the value of stocks, etc. or money and other assets received by stockholders, etc. of a merged corporation from the merged corporation. Article 44 of the same Act provides that matters necessary for the calculation of liquidation income amount shall be prescribed by the Presidential Decree. Article 117-2(1) of the Enforcement Decree of the same Act provides that where there are stocks, i.e., stocks of the merged corporation acquired prior to the merger by the merged corporation, if the liquidation income of the extinguished corporation is deemed to be unreasonably reduced due to the acquisition, the acquisition value of the combined stocks shall be deemed to be a merger subsidy, and the acquisition value of the combined stocks provided for in Article 117-2(1) of the Enforcement Decree of the same Act shall be deemed to be the amount of liquidation income received by the stockholders of the extinguished corporation provided for in Article 43(3) of the same Act from the merged corporation.

Therefore, Article 117-2 (1) of the Enforcement Decree of the same Act provides that the acquisition value of combined stocks shall be deemed a merger subsidy and the liquidation income shall be calculated as the liquidation income pursuant to the purport of Article 43 (3) of the same Act by delegation under the delegation of Article 44 of the same Act is nothing more than the provision of the calculation method of liquidation income in the case of combined stocks, and a new taxation requirement shall not be determined without any ground for delegation of the mother Act. Thus, the provision of Article 117-2 (1) of the same Enforcement Decree of the same Act goes beyond the scope of "necessary matters concerning the calculation of liquidation income amount" under Article 44 of the same Act and shall not be deemed to be in violation

In the same purport, the court below is just in rejecting the Plaintiff’s assertion that the invalidation is in violation of the principle of no taxation without law under Article 117-2(1) of the Enforcement Decree of the Corporate Tax Act.

2. The court below acknowledged the process of acquiring the shares of this case and found the facts in its judgment, and held that the plaintiff, with the intent to expand the company and operate the gas industry, has acquired all shares of the above company (the shares of the non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party identical gas company's acquisition of the shares) under the intent to merge with the above company. The plaintiff issued only new shares of the above non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party's non-party non-party non-party non-party non-party company's acquisition of the shares of the same gas company) and caused an unfair reduction of the liquidation income of the above

In addition, since Article 117-2 of the Corporate Tax Act does not limit the scope of application to transactions with the related parties, it is not possible to find out that there is an error of incomplete deliberation in the opposite position.

3. Article 117-2 (1) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 9699 of Dec. 31, 1979) provides that the corporate tax on liquidation income of a corporation shall be applied from the liquidation income amount accrued from the first merger after the enforcement of this Decree. Thus, where the merger took place after the enforcement date of the above Enforcement Decree, even if the acquisition of the combined stocks was made prior to the acquisition, it shall be interpreted that

The provision of Article 117(1) of the Enforcement Decree of the Corporate Tax Act is merely a provision on the method of calculating the amount of liquidation income in the case of combined shares pursuant to the purport of Article 43(3) of the Corporate Tax Act, which is a model of the provision of Article 117(1) of the Enforcement Decree of the Corporate Tax Act, and it is not a provision on the requirement of new taxation.

The court below is just in holding that Article 117-2 (1) of the Enforcement Decree of the above Act can be applied in calculating liquidation income arising from the merger of the company since the merger with the same gas company to the non-party even before the enforcement of the above Enforcement Decree, even if the plaintiff acquired shares of the company before the enforcement of the above Enforcement Decree, and there is no error in the misapprehension of legal principles concerning the principle of prohibition of retroactive taxation

4. If the Plaintiff, as determined by the court below, had the former and the same gas company acquire all shares of the Plaintiff’s company of the same gas company, and the Plaintiff merged to the same gas company of the same gas company to the former, the Plaintiff shall be deemed to have owned all shares of the same gas company of the same gas company directly from that time by comprehensively transferring all rights and obligations of the company of the same gas company to the former due to the above merger.

In the same purport, the court below was just in holding that the plaintiff acquired shares of the non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party non-party 1 and there

5. General rules of the National Tax Service are nothing more than administrative rules that instruct the criteria and enforcement criteria for tax law interpretation within the tax authority. Thus, it cannot be said that the court erred by taking into account the provisions of the amended General rules concerning the issues before the amendment of the basic general rules.

The court below did not follow the provisions of the General Rules of the Corporate Tax Act amended as of January 1, 1985 without following the provisions of the General Rules of the Corporate Tax Act amended as of January 1, 1985, in calculating the amount of the transferred stocks which are deducted from the merger subsidy when the merged corporation delivers the stocks for the original stocks at the time of the issuance of the merged corporation. The arguments are groundless.

6. Therefore, the appeal is dismissed, and all 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.

Justices Song Man-man (Presiding Justice)