Whether there is a constructive dividend income under Article 26 (1) 4 of the former Income Tax Act (amended by Act No. 3793 of Dec. 23, 1985) where there are combined shares (negative)

According to Article 26 (1) 4 of the former Income Tax Act (amended by Act No. 3793, Dec. 23, 1985) and Article 50 (4) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 12154, May 8, 1987) of the same Act, even in cases where the shares of the merged company acquired by the merged company are deemed to be shares of the merged company and the acquisition value thereof shall be deemed to be the dividend income for the acquisition of the shares of the merged company, so the shareholders under the Income Tax Act of the merged company at the time of the merger registration shall be deemed to be the merged company. Therefore, since the acquisition value of the shares of the merged company, which includes the acquisition value of the shares of the merged company, shall be deemed to be the dividend income, it shall be deemed that there is no dividend income

Article 26 (1) 4 of the former Income Tax Act (amended by Act No. 3793 of Dec. 23, 1985); Article 50 (4) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12154 of May 8, 1987); Article 117-2 of the Enforcement Decree of the Corporate Tax Act

[Plaintiff-Appellant-Appellee] Plaintiff 1 and 1 other (Law Firm Han, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant-appellee)

Dongyang Petroleum Co., Ltd., Counsel for the defendant-appellant in charge of Dong-dong Law Office

The Director of Incheon Tax Office

Seoul High Court Decision 88Gu7448 delivered on February 6, 1991

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The defendant's grounds of appeal are examined.

The court below acknowledged that the non-party 1 and the non-party 8, who was a shareholder of the Kudong Commercial Corporation, transferred all the shares issued by the above company to the plaintiff company on January 9, 1984; that the plaintiff company merged the above company and completed the registration of merger on September 30, 1985; and that the acquisition value of the above shares acquired by the plaintiff company constitutes a consolidated share under Article 117-2 of the Enforcement Decree of the Corporate Tax Act and should be calculated as liquidation income of the above company, even if the above shares acquired by the plaintiff company should be considered as a merger subsidy, the court below determined that the merger corporation's liquidation income should be calculated in accordance with Article 26 (1) 4 of the Income Tax Act (amended by Act No. 3793 of Dec. 23, 1985) and Article 50 (4) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12154 of May 8, 1987) of the above corporation's Income Tax Act at the time of the merger registration of this case is the plaintiff company.

In light of the relevant evidence and records and the provisions of the relevant Acts and subordinate statutes, the judgment of the court below on such recognition is just and acceptable. On the premise that the above non-party 1 and the above non-party 8 should be deemed the actual shareholder at the time of the merger, the court below did not properly examine the judgment of the court below and criticizes that the above non-party 1 and the above non-party

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

Justices Yoon Jae-ho (Presiding Justice)