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(영문) 서울행정법원 2007. 06. 29. 선고 2006구합45180 판결
비상장주식 유찰시 공매가액의 시가 인정여부[국승]
Title

Whether the market price is recognized at the time of unlisted stocks evaluation;

Summary

Even if there is an example of transaction, it shall not be a price formed by normal transactions, and the value of unlisted stocks shall be evaluated as a supplementary assessment method.

Related statutes

Article 49 of the Inheritance Tax and Gift Tax Act:

Text

1. The Plaintiff’s claim against the Defendant ○○○ Head of the tax office and the Plaintiff’s claim against the Defendant ○○ Head of the tax office are all dismissed.

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

Cheong-gu Office

On August 4, 2005, the head of ○○ Tax Office revoked each disposition of KRW 367,043,610, the transfer income tax corresponding to the year 2002 against the Plaintiff Lee○○, and KRW 1,405,14,150, the gift tax corresponding to the year 2002 imposed on the Plaintiff Lee○ on December 15, 2005 by the head of ○○ Tax Office.

Reasons

1. Details of the disposition;

A. On January 9, 2002, the Plaintiff Lee ○○, a type of ○○○○, transferred 210,000 non-listed shares issued by ○○ Housing Co., Ltd. (hereinafter “○○ Housing”) to KRW 18,830 per share value of 3,954,30,000, and 70,000 non-listed shares issued by ○○○○○○○○ (hereinafter “○○○○ Construction”) (hereinafter “2 non-listed shares, including 1 non-listed shares; hereinafter “3,747,10,00,00 won per share) to KRW 53,530 per share, and thereafter reported and paid capital gains tax.

B. Under Article 101 of the Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006; hereinafter the same shall apply), the Director of the Seoul Regional Tax Office: (a) assessed the transfer of the instant unlisted stocks to ○○○○○○ by means of wrongful calculation; (b) the transfer of the Plaintiff’s ○○○○○○○○○○○○○○○ by means of the inheritance tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003; hereinafter the same shall apply) as the acquisition of the gift tax and gift tax under Article 35; (c) the transfer value and gift tax were 63 of the Inheritance Tax and Gift Tax Act and Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828 of Dec. 30, 2002; (d) the net asset value of 10,135,7600 won per share; and (the net asset value of 206 won per share).

Each entry of Gap evidence 1, Eul evidence 1, Eul evidence 1, Eul evidence 2, Eul evidence 2-1, 2, 3, Eul evidence 4 and 5, respectively.

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

(1) In order to dispose of the unlisted stocks issued by ○○○○○○○ (hereinafter “○○○○”) of the school juristic person, it indicated that the successful bidder should be determined by the method of competitive bidding at KRW 5,00 per share of the above stocks with the face value of KRW 5,00, and the successful bidder should be offered. However, the market price of the above stocks does not exceed the above face value per share. Thus, each disposition of this case that deemed that the market price of the above stocks exceeds the above face value is unlawful.

(2) On July 6, 2002, the Plaintiff transferred 25,000 non-listed stocks issued at ○○ Housing to ○○○○○ to 6,500 won per share. From November 21, 2002 to December 11, 2002, the Plaintiff transferred the non-listed stocks at 6,50 won per share to ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, from November 21, 2002, to ○○○○○○○○○○○○○○○○○○○○, from December 11, 2002, despite the actual sale price of the non-listed stocks at 12,00 won per share, the Defendant’s calculation of the value of the non-listed stocks in accordance with the supplementary assessment method under the Inheritance Tax and Gift Tax Act is unlawful.

(3) In light of the fact that the appraisal value per share of ○○○○○○○○○○ Corporation, a reliable appraisal institution in relation to 1 non-listed shares, was assessed as KRW 9,021, and according to the stock price list of ○○○○○○○○○○○○○○○○○○○ in 2001, the average stock price of a similar listed company was expressed as KRW 6,625 at the lowest amount of KRW 2,020 per year, each disposition of this case on the premise that the market price exceeds KRW 18,830 per share, and KRW 53,530 per share in the case of 2 non-listed shares at the time of filing a transfer income tax report.

(4) Although the Inheritance Tax and Gift Tax Act delegates the Presidential Decree to provide for a supplementary evaluation method in close vicinity to the market price as much as possible, the amount of net profit and loss under the Enforcement Decree of the Inheritance Tax and Gift Tax Act exceeds the net asset value, the amount of the supplementary evaluation of unlisted stocks solely with the net profit and loss was set, thereby deviating from the bounds delegated by the Act that reflects the value of the

(5) As long as the transfer value was determined based on the market price or the amount of supplementary assessment as calculated at the time of conclusion of the sales contract, even if there was an additional decision on the determination of the additional correction of the income of the issuing company for each business year thereafter, if it was determined as of the date of conclusion of the sales contract, the said sales amount cannot be deemed as having been lower than the market price. Accordingly,

(6) The Plaintiffs, even if based on the supplementary assessment methods at the time of concluding the sales contract for the instant unlisted stocks, did not have any choice but to decide on the sales contract by calculating an amount different from the sales price. Therefore, the Plaintiffs’ additional tax of each of the instant dispositions is unlawful on the grounds that there were justifiable grounds for not being

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) As to the plaintiffs' first argument

(A) Article 60(1) and (2) of the Inheritance Tax and Gift Tax Act provides that the value of the property on which the inheritance tax or gift tax is levied is based on the market price as of the date of commencing the inheritance or the date of donation (hereinafter referred to as the “date of appraisal”), and that the market price includes the value which is generally deemed to be constituted in cases where free transactions are made between many and unspecified persons, and the market price includes the amount which is recognized as the market price under the conditions as prescribed by the Presidential Decree, such as the public sale price. Article 49(1)1 and 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which was enforced at the time of transfer of the non-listed stocks of this case, stipulates that the sale (excluding cases where the transaction price is deemed to be objectively unfair) or public sale

(B) According to the statement No. 3-1 and No. 2, ○○○○○○○ newspaper and ○○○○○○○○○ newspaper as of December 24, 2001, publicly announced that the public auction of KRW 704,50 (5,000 per share price) of non-listed stocks issued on the basis of ○○○○○○○○○○○○○○○ newspaper and the total price per share was publicly announced. The successful bidder is determined as the person who presented the highest price among those who presented the bid price at a price higher than the expected unit price of the party members by disclosing the number and unit price stated in the tender application for the bid, and the highest price was determined as the person who presented the highest price was lower than the bidding price. However, if shares subject to public auction were non-listed stocks, it can be acknowledged that there was no bidder’s interest in acquiring management profits than the market price. Accordingly, the plaintiffs’ assertion that the shares subject to public auction did not have become the market price under the Enforcement Decree of the Inheritance Tax and Gift Tax Act.

(2) As to the second argument by the plaintiffs

(A) According to Article 63(1)1(c) of the Inheritance Tax and Gift Tax Act, stocks and equity shares that are not listed on the Korea Stock Exchange shall be assessed in such a manner as prescribed by the Presidential Decree, considering the corporation’s assets and profits, etc., and Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002) provides for the supplementary evaluation method for shares that are not listed on the Korea Stock Exchange under Article 63(1)1(c).

(B) The tax authority has the burden of proving that the calculation of the value of donated property is difficult to calculate the market price at the time of donation of donated property, and that it is difficult to calculate the market price. The market price here refers to the objective exchange price formed through normal transactions, even if there is a transaction example, it cannot be deemed as a price formed by normal transactions that properly reflects the objective exchange value of donated property. If the subject of donation is unlisted stocks, it shall be deemed difficult to calculate the market price, and the value thereof may be calculated according to the supplementary assessment method (see Supreme Court Decision 96Nu9423, Oct. 29, 196).

(C) Comprehensively taking account of the overall purport of the pleadings in the statement No. 3-1 and No. 2 of the evidence No. 3-2, since the fact that the Plaintiff, ○○○, etc. asserted that the Plaintiff transferred the instant unlisted stocks is a person with a special relationship with the Plaintiff under the Enforcement Decree of the Inheritance Tax and Gift Tax Act, it is difficult to regard each transaction price of the Plaintiffs’ assertion as an objective exchange value, and it is difficult to calculate the market price in a way other than a supplementary assessment method. Therefore, the second argument

(3) As to the third argument of the plaintiffs

According to Article 49(1)3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, an appraisal agency’s appraisal value of a certain property among the taxable objects of gift tax is recognized as the market price, but excluding the "stocks" under Article 63(1)1 of the Inheritance Tax and Gift Tax Act. Thus, the market price cannot be calculated based on the value according to the above appraisal result. Therefore, the

(4) As to the plaintiffs' fourth argument

Article 63(1)1 (c) of the Inheritance Tax and Gift Tax Act provides that unlisted stocks shall be evaluated by the method prescribed by the Presidential Decree in consideration of the assets, earnings, etc. of the relevant corporation. Accordingly, Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that, in principle, net profit and loss shall be evaluated as the valuation method of unlisted stocks, and where the net profit and loss value falls short of the net asset value, the net asset value shall be calculated according to the net asset value if the net profit and loss value falls short of the net asset value. As such, the above provision of the Inheritance Tax and Gift Tax Act stipulates that the assets and profits of the relevant corporation are indicated as an important factor for calculating the value of unlisted stocks, but it shall not be deemed that Article 54 of the former Inheritance Tax and Gift Tax Act provides that the real value of the relevant corporation shall be evaluated by the net profit and loss, which reflects the future profit and loss value, in principle, at least the net asset value at the time of disposal of the relevant corporation.

Therefore, since Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act cannot be deemed as a invalid provision that deviates from the scope delegated by the parent law, the plaintiffs' fourth assertion is without merit.

(5) As to the plaintiffs' fifth argument

Comprehensively taking account of the overall purport of the pleadings in the statement No. 3-1 and No. 2 of the evidence No. 3-2, the Defendant did not evaluate the above stocks on the basis of the date after the date of conclusion of the sales contract for the unlisted stocks of this case. As a result of the tax investigation with ○○○ and ○○○○, the omission of the fiscal year related to the assessment of the unlisted stocks of this case was discovered, and it can be acknowledged that the above company reflected it in the reported financial statements

(6) As to the plaintiffs' fifth argument

(A) Additional tax is an administrative sanction imposed pursuant to the provisions of tax law in cases where a taxpayer performs his/her duty of return, tax payment, etc. without any justifiable reason in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, and the taxpayer’s intent or negligence is not considered. However, in cases where a taxpayer is not unaware of his/her duty, or where there is a circumstance that it is unreasonable for him/her to expect the fulfillment of such duty to the party concerned, etc., and there is a justifiable reason that makes it difficult to impose penalty tax on him/her (see, e.g., Supreme Court Decision 2002Du4761, Dec. 11, 20

(B) First of all, according to the above facts, although the market price per share of the 1 non-listed stocks appraised by supplementary evaluation methods to the Plaintiff Lee ○, who is not another person, is 24,456 won, and the market price per share of 2 non-listed stocks is 89,136 won, the non-listed stocks in this case were transferred to 7%, 8,830 won per share of 60%, and 53,530 won per share of 60%, which are only 53,530 won. Accordingly, if the provision on the wrongful calculation report amount is applied to this, if the reported amount falls short of the legitimate income amount, it cannot be deemed that there is a justifiable reason for the Plaintiff Lee○-○ to not properly report and pay the transfer income tax base after the transfer of the non-listed stocks in this case.

(C) Next, pursuant to Article 35(1)1 of the Inheritance Tax and Gift Tax Act, and Article 26(1) and (3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the transferee of the property at a price lower than the market price (i.e., the price at which the price of the property that was acquired at the market price is at least 30/100 of the market price or the difference is at least 100 million won) is liable to pay gift tax on the amount equivalent to the difference between the price and the market price. In this case, as seen earlier, the Plaintiff ○○ is liable to pay taxes at least at a price that is merely 60-70% of the market price per share of the non-listed stocks appraised by supplementary evaluation method from the Plaintiff ○○○, the Plaintiff’s duty to pay taxes is unreasonable to the Plaintiff ○○, which is obviously lower than the market price of the non-listed stocks, and the Plaintiff’s duty to pay taxes can not be deemed to have been known to the Plaintiff ○○, which is obviously less than the market price of the non-listed stocks.

In addition, according to Article 78(1)1 of the Inheritance Tax and Gift Tax Act, penalty tax shall be exempted for the amount that falls short of the tax base to be reported due to a difference in the appraised value of the donated property as prescribed by the Presidential Decree. However, according to Article 80(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the difference in the appraised value as prescribed by the Presidential Decree means the appraisal of inherited property or donated property reported as a percentage within the inheritance tax or gift tax, and therefore, in the absence of the return itself as in this case

Therefore, the plaintiffs' fifth argument is without merit.

3. Conclusion

Thus, the plaintiff Lee ○-○'s claim against the defendant ○○○ Tax Office and the plaintiff Lee ○○ Tax Office's claim against the defendant ○○ Tax Office is dismissed as all of the grounds for appeal.

Related Acts and subordinate statutes

Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006)

Article 101 (Calculation of Capital Gains by Wrongful Acts)

(1) If it is deemed that any act or computation of a resident having any transfer income has reduced unreasonably the tax burden on such income through any transaction with the resident concerned, the superintendent of the district tax office or the director of the regional tax office having jurisdiction over the place of tax payment may calculate the income amount in the current year regardless of

Article 115 (Additional Tax on Transfer Income Tax)

(1) If a resident fails to make the final return or makes a return of any amount short of the income amount to be returned, the amount equivalent to 10/100 of the amount calculated by multiplying the calculated tax amount by the ratio of the income amount not returned or short of the amount to be returned, to the transfer income amount (hereinafter referred to as "additional return for negligent tax returns") by the ratio of the

(2) If a resident fails to pay the transfer income tax amount as prescribed in Article 111, or pays it below the payable tax amount, the amount calculated by applying the rate as prescribed by the Presidential Decree in consideration of the interest rate on loans in arrears by financial institutions to the unpaid tax amount (hereinafter referred to as "additionally paid additional tax") shall

Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173, Dec. 30, 2003)

Article 98 (Dispudiation of Wrongful Acts)

(1) The term “person having a special relation” under Articles 41 and 101 of the Act means one of the following persons:

1. Relatives of the relevant resident;

(2) For the purpose of Article 41 of the Act, the term “if it is deemed that any act makes the burden of tax reduced unreasonably” means the time falling under any of the following subparagraphs:

1. When a person purchases assets from a related party at a price higher than the market price or transfers assets to a related party at a price lower than the market price;

Article 167 (Unfair Act and Calculation of Transfer Income)

(3) For the purpose of Article 101 (1) of the Act, the term “if it is deemed that any act makes the burden of tax reduced unreasonably” means the occasion falling under any subparagraph of Article 98 (2).

(4) In case of transactions with related parties under each subparagraph of Article 98 (1), if it is deemed that any tax burden has been unjustly reduced due to the acquisition of land, etc. in excess of the market price or the transfer of land below the market price, such acquisition value or transfer value

(5) In the application of the provisions of paragraphs (3) and (4), the market price shall be the value assessed by applying mutatis mutandis the provisions of Articles 60 through 64 of the Inheritance Tax and Gift Tax Act and Articles 49 through 59 of the Enforcement Decree of the same Act. In this case, the "period not exceeding 6 months before or after the evaluation base date (3 months in the case of donated property) in the main sentence of Article 49 (1) of the Inheritance Tax and Gift Tax Act

Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003)

Article 35 (Presumption of Donation at Time of Transfer of Low Price or High Price)

(1) Where a person falling under any of the following subparagraphs acquires or transfers the property, he shall be deemed to have received a donation of the amount equivalent to the difference between the price and the market price and the profits as prescribed by the Presidential Decree:

1. The transferee of the property, in case where he takes over the property from a person having a special relationship at a price below the market price;

2. In case where the property is transferred to a specially related person at a price above the market price, the transferor of such property;

(2) Persons having special relationships as referred to in paragraph (1) 1 and 2, low-value and the scope of high-value shall be prescribed by the Presidential Decree.

Article 60 (General Rules, etc. of Appraisal)

(1) The value of property on which an inheritance tax or a gift tax is levied under this Act shall be the market price as of the date of commencing the inheritance or of donation (hereinafter referred to as the "standard of appraisal"). In such cases, the value appraised by the method of assessment stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63

(2) The market price under paragraph (1) shall be the price which is considered to be normal in the case of free trade between many and unspecified persons, and shall include the expropriation, public auction price, appraisal price, and others which are recognized as the market price under the conditions

(3) In applying paragraph (1), where it is difficult to compute the market price, the value assessed by the methods prescribed in Articles 61 through 65 in consideration of the type, scale, transaction status, etc. of the relevant property.

Article 63 (Appraisal of Securities, etc.)

(1) The appraisal of securities, etc. shall be made according to the following methods:

1. Appraisal of stocks and investment shares:

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised by the method as prescribed by the Presidential Decree in consideration of corporate assets and revenues

Article 78 (Additional Tax, etc.)

(1) When, with respect to inherited property or donated property, a report is not made by the due date for report under Article 67 or 68, or a report is made which falls short of the tax base to be reported, the head of the tax office, etc. shall add an amount equivalent to 20/100 of the amount calculated by multiplying the non-reported tax base or the ratio of the insufficient amount (referring to any amount falling under any of the following subparagraphs excluding any amount falling under any of the following subparagraphs) to the non-reported tax base to the tax base to be reported, to the amount calculated, by the sum of the non-reported tax amount calculated, or gift tax

1. An amount short of the tax base to be reported due to the difference of appraised values as prescribed by the Presidential Decree;

2. Amount falling short of the tax base to be reported due to the error in applying the deductions under Articles 18 through 24, and 53 (1).

Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002)

Article 26 (Calculation Method, etc. of Profits from Transfer of Low or High Price)

(1) For the purpose of Article 35 (1) 1 of the Act, the term “low value” means the price in case where the value (referring to the value appraised under Articles 60 through 66 of the Act; hereafter in this Article and Article 31, referred to as the “market price”) of the property acquired (excluding the convertible bonds, etc. under Article 40 (1) of the Act) differs by not less than 30/100 of the market price or the difference is not less than 100 million won.

(2) The term “high value” in Article 35 (1) 2 of the Act means the value in case where the value of the transferred property (excluding the convertible bonds, etc. under Article 40 (1) of the Act) minus the market price is 30/100 or more of the market price, or the difference is 100 million won or more.

(3) For the purpose of the text of Article 35 (1) of the Act, the term “gains as prescribed by the Presidential Decree” means the value calculated under paragraphs (1) and (2) minus the smaller amount among the prices under each of the following subparagraphs:

1. Where the value obtained by subtracting the price from the market price is at least 30/100 of the market price or at least 30/100 of the market price, the value equivalent to 30/100 of the market price;

2. 10 million won.

Article 49 (General Rules, etc. of Assessment)

(1) The term "those recognized as the market price" in Article 60 (2) of the Act, such as the expropriation, public auction price and appraisal price, etc., as prescribed by the Presidential Decree, means, in case of sale, appraisal, expropriation, auction (referring to an auction under the Civil Procedure Act; hereafter in this paragraph, the same shall apply) or public auction during a period of not more than 6 months before and after the standard date of appraisal (3 months in the case of donated property), the

1. If the fact of sale and purchase of the relevant property exists, the transaction value: Provided, That this shall not include cases where the transaction value is deemed objectively unfair, such as transactions with persons with a special relationship as referred to in Article 26 (4);

2. In case where there exist the appraisal values appraised by the reliable appraisal institutions (hereinafter referred to as the "appraisal institutions") as prescribed by the Ordinance of the Ministry of Finance and Economy with respect to the relevant property (excluding the properties prescribed in Article 63 (1) 1 of the Act), the average value of such appraisal values: Provided, That this shall not apply to those falling under any of the following items, and in case where the relevant appraisal values fall short of 80/100 of the values appraised pursuant to the provisions of Articles 61, 62, 64 and 65 of the Act, it shall be based on the value requested by the head of a tax office (including the head of a regional tax office, etc.; hereinafter referred to as the "head of a regional tax office, etc.") to other appraisal institutions, on which

(a) Values which are not suitable for the payment purpose of inheritance tax and gift tax, such as the assessment of relevant property on the condition that certain conditions are met;

(b) Value of the relevant property not appraised in the original form as of the standard date of appraisal;

3. Where there exists a fact of expropriation, auction or public sale of the property concerned, the amount of compensation, the amount of auction or public sale;

Article 54 (Appraisal of Unlisted Stocks)

(1) Stocks and investment shares not listed on the Korea Stock Exchange under Article 63 (1) 1 (c) of the Act (hereafter in this Article, referred to as "listed shares non-listed shares") shall be the value assessed by the following formula:

Value per share = The weighted average amount of net profits and losses for the latest three years per week ± average interest rate formed in the financial market, as prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as "net value of profit and loss") in consideration of the average interest

(2) Where the value of unlisted stocks appraised under paragraph (1) falls short of the value appraised by the following formula, the value shall be the value appraised by the following formula:

Value per share = Net asset value of the corporation ± Total number of outstanding stocks (hereinafter referred to as "net asset value")

(3) In applying the provisions of paragraphs (1) and (2), where a corporation which has issued stocks or investment shares under Article 63 (1) 1 (c) of the Act owns stocks or investment shares not more than 10/100 of the total number, etc. of outstanding stocks of a corporation which has issued other unlisted stocks, the evaluation of the other unlisted stocks may be based on the acquisition value provided for in Article 74 (1) 1 (e) of the Enforcement Decree of the Corporate Tax

(4) In applying the provisions of paragraph (2), the "total number of issued stocks" shall be based on the total number of issued stocks as of the evaluation base date.

Article 80 (Additional Tax, etc.)

(1) The phrase “Difference in the appraised value as prescribed by the Presidential Decree” in Article 78 (1) 1 of the Act means the value falling short of the tax base according to the determination of the tax base according to the value assessed under Articles 60 (2) and (3) and 66 of the Act concerning the inherited or donated property, one’s relocation right, one’s relocation right, one’s own relocation right,

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