early 2012 Middle 3156 ( December 11, 2012)

It is recognized that there is a justifiable reason for transactions with respect to high-priced transfer between non-specially related persons.

The transfer of shares constitutes a transaction made in return for the consideration of the transfer of the position of a KOSDAQ-listed company, where there is a justifiable reason to make a transaction at a price higher than the market price traded in the open market due to the practice of the transaction, and thus, the gift tax disposition

2012Guhap16122 Revocation of Disposition of Imposition of Gift Tax

ThisAAA

The superintendent of the tax office

May 22, 2013

June 26, 2013

1. The Defendant’s disposition of imposing KRW 000 on the Plaintiff on February 9, 2012 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 disposition;

A. The Plaintiff held 4,297,860 shares of BB Heavy Industries Co., Ltd. (hereinafter referred to as the “former BB Heavy Industries Co., Ltd.”), which is a KOSDAQ-listed corporation operating the business of manufacturing industrial boiler (hereinafter referred to as the “instant shares”).

B. On May 21, 2008, the Plaintiff entered into an agreement on acquisition of stocks and management rights to transfer the instant stocks toCC Food Co., Ltd. (hereinafter “CC Food”) with 000 won. On the same day, it entered into a revised agreement with the former BB Heavy Industries to separate the existing business sector of the former BB Heavy Industries and sell the instant stocks to the Plaintiff in total of KRW 10 billion,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,00,00,00.

C. The Plaintiff transferred the instant shares toCC food from May 21, 2008 to July 10 of the same year in accordance with the above acquisition limit agreement.

D. According to Article 35(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 2011; hereinafter “the Act”), the commissioner of the Daegu Regional Tax Office notified the Defendant that the amount corresponding to the difference between the transfer value (00 won, and 000 won per share) and the market price (00 won, and 000 won per share) should be deemed to have been donated to the Plaintiff, and accordingly, the Defendant imposed KRW 000 on the Plaintiff on February 9, 2012 (hereinafter “the instant disposition”).

E. On June 14, 2012, the Plaintiff, who was dissatisfied with the instant disposition, brought an appeal with the Tax Tribunal, and was dismissed on December 11, 2012.

[Grounds for Recognition] The facts without dispute, Gap 1 through 6, 11, 17 through 26, and Eul 1 (if any, including each number), and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff, as a major shareholder with the control over the former BB Industries, which is a KOSDAQ-listed corporation, sold the control of the listed company, and thereafter acquired the existing company’s assets at lower prices, thereby transferring profits arising from the management and listing of the former BB Industries along with the transfer of the shares of this case. Accordingly, this constitutes a case where justifiable grounds exist to make transactions at a price higher than the market price traded in the open market due to transaction practices. Accordingly, the Defendant’s disposition of this case is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Article 35(2) of the Act provides that where property is acquired or transferred between persons who are not in a special relationship without justifiable grounds in light of transaction practices and where property is transferred at a price significantly higher than the market price, an amount equivalent to the difference between the price and the market price shall be presumed to have been donated. Article 26(6) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 21292 of Feb. 4, 2009) provides that "the value of the transferred property is significantly higher than the market price if the difference between the market price and 30/100 or more of the market price of the transferred property. In addition, in general, the burden of proving the fact of taxation requirements is in the taxation authority in a revocation lawsuit, and in light of the language, content, form, etc. of Article 35(2) of the Act, in order to impose gift tax under Article 35(2) of the Act, the taxpayer shall prove that there is no justifiable reason for the transfer of property to a person other than the person having a special relationship.

2) If the transfer value of the instant shares falls under the case of transfer at a significantly higher price than the market price without good cause under transaction practice, and (1) if the same parties have freely traded shares with sufficient information, then it cannot be concluded that the said transaction is not a general and normal transaction price. (2) The two contracts on the instant shares include that the acquisition of company management rights is stated for the purpose of the contract (as referred to in subparagraph (a) and that the transferor’s obligation to transfer management rights is clearly defined for the purpose of acquisition of the instant shares, and that it is more favorable for the Plaintiff to raise funds through the KOSDAQ market in the case of KOSDAQ companies, and that there is no particular difference between the transfer price and the actual transaction price at the time of the transaction. (3) If the transfer price of the instant shares is determined by the former Food Industry Co., Ltd., Ltd. from among those listed at the market price after the acquisition of the shares, it can be seen that the transfer price of the shares constitutes a new food Co., Ltd.’s new food Co., Ltd.’s new food Co., Ltd.

3. Conclusion

Then, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by admitting it.