Plaintiff (Attorney Hwang Jong-sung et al., Counsel for the plaintiff-appellant)

Head of the tax office;

March 24, 2006

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of gift tax of KRW 688,493,202 against the Plaintiff on October 16, 2003, which exceeds KRW 71,318,802, shall be revoked.

1. Details of the disposition;

A. The non-party 3 corporation was established on September 1991 and operated an Internet information search box "○○○" from around April 1998. At the end of 1998, the total number of shares issued was KRW 100,000 (per 10,000 won). Of them, the 40% was owned by the non-party 6, the 35% was owned by the non-party 7, and the 25% was owned by the non-party 8. The plaintiff is the non-party 6 and the non-party 7's major shareholder.

B. Nonparty 3 Co., Ltd. issued new shares more than four times as indicated below. At the time of the capital increase, the Plaintiff, who was a related party, acquired all forfeited shares in the case of the capital increase of 1 and 2, following a resolution of the board of directors on the forfeiture of all the shareholders. In the case of the third capital increase of 19,900 shares, 10,000 shares, including Nonparty 1, etc., and 149,900 shares in the case of the third capital increase of 19,900 shares, the Plaintiff accepted the remaining 149,900 shares at each face value. In the case of the fourth capital increase, Nonparty 2 Co., Ltd. received 50,00

본문내 포함된 표 ？ 1차 증자 2차 증자 3차 증자 4차 증자 증자일자 1999. 6. 14. 1999. 6. 17. 1999. 7. 30. 1999. 8. 2. 발행 신주 수 10만 주 5만 주 199,900주 5만 주 발행 후 총 주식 수 20만 주 25만 주 44만 9,900주 49만 9,900주 발행가액 1만 원 1만 원 1만 원 6만 원 인수인 원고 원고 원고 : 14만 9,900주 소외 1 등 10명 : 5만 주 소외 2 주식회사 납입액 10억 원 5억 원 원고 : 14억 9,900만 원 소외 1 등 10명 : 5억 원 30억 원

C. From June 17, 1999 to June 26, 1999, the Plaintiff transferred 28,149 shares among the shares acquired as above to Nonparty 18, including Nonparty 9, to Nonparty 15,000 per share. From July 14, 1999 to July 19, 199, the Plaintiff transferred 61,600 shares per share to Nonparty 15 et al.

D. On October 16, 200, the Defendant assessed the value of forfeited stocks at par value at the time of the capital increase as above and assessed the constructive value as stipulated in Articles 39 and 29(2) of the Inheritance Tax and Gift Tax Act, which the Plaintiff acquired by acquiring the forfeited stocks at par value at the time of the capital increase, and assessed the value of KRW 15,00,00, which is the transfer value of the stocks to Nonparty 9, etc. after the first capital increase, from the Plaintiff, at the time of the third capital increase, 15,00,000, the market value before the third capital increase, which is 60,000, which is the acquisition value at the time of the fourth capital increase to the nonparty 2, and then assessed the value of KRW 10,00,000,000 at par value at the time of the second capital increase, 100,000,000 won at the time of the second capital increase, 206, 206, 20036,3636,25,2004.

E. On December 22, 2003, the Plaintiff filed a request for a national tax trial on December 22, 2003, but was dismissed on September 13, 2005.

[Ground for recognition] Unsatisfy

2. Whether the disposition is lawful;

A. The plaintiff's assertion

15,000 won applied by the Defendant to the total value of the capital increase in calculating the constructive value of the primary capital increase cannot be deemed to be the total value of the capital increase after the capital increase, and 60,000 won applied to the total value of the capital increase in calculating the constructive value of the third capital increase is the sales value after the capital increase, and the value of the third capital increase includes the value of the sales value after the capital increase and the price of the transfer of the substantial management right of the non-party 3 corporation at the time of the fourth capital increase, and thus, it is unlawful to impose gift

B. Relevant statutes

[Inheritance Tax and Gift Tax Act (amended by Act No. 6048 of Dec. 28, 1999)]

(1) Where profits falling under any of the following subparagraphs have been acquired as a corporation issues new stocks or equity shares (hereafter in this Article, referred to as "new stocks") in order to increase its capital (including the amount of investment; hereafter in this Article and Article 39-2, the same shall apply), the amount equivalent to the relevant profits shall be deemed the value of donated property of the person who has acquired such profits:

1. In case where a shareholder of the relevant corporation (including an investor; hereafter the same shall apply in this Article) has renounced in whole or in part the right to receive new stocks for the purpose of increasing the capital or investment amount of the relevant corporation (hereafter referred to as “new stocks” in this paragraph), benefits under the provisions of the following items (in case where there are not less than 2 minor shareholders who have renounced in whole or in part the right to receive new stocks, it means the benefits which are calculated by deeming that one minor shareholder has renounced his right:

(a) In case where such renounced new stocks (hereafter in this paragraph, referred to as the “beneficial stocks”), are again allocated (excluding the case where allocating such forfeited stocks by the public offering method of securities under Article 2 (3) of the Securities and Exchange Act), the benefits as prescribed by the Presidential Decree from among the benefits acquired by a person who received the allocation of forfeited stocks, by obtaining such allocation

(1) The value of property on which an inheritance tax or a gift tax is levied under this Act shall be based on the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2)) shall be deemed the market price.

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

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

Article 68 (Reporting of Tax Base of Gift Tax) (1) A person liable to pay the gift tax pursuant to Article 4 shall, within three months from the date of donation, report on the taxable value and tax base of gift tax pursuant to Articles 47 and 55 (1) to the head of the competent tax office having jurisdiction over the place of

【Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 16660 of Dec. 31, 199)】

(2) The term “profit prescribed by the Presidential Decree” in Article 39 (1) 1 (a) of the Act means the amount calculated by multiplying the value calculated pursuant to the provisions of subparagraph 1 minus the value pursuant to the provisions of subparagraph 2 by the number of new stocks pursuant to the provisions of subparagraph 3:

1. [The appraised value per share before capital increase 】 The gross number of outstanding stocks before capital increase 】 (the number of new stocks 】 the number of stocks increased by the capital increase 】 the number of stocks increased by the capital increase) ± (the number of stocks increased by the total number of

2. The acceptance price per stock of new stocks;

3. The number of new stocks for those who have been allocated in excess of the number of new stocks to be allocated under equal conditions; and

(1) For the purpose of Article 60 (2) of the Act, the term “those recognized as the market price under the conditions as prescribed by the Presidential Decree, such as the price of expropriation, public sale, and appraisal” means the value confirmed by the following provisions only when there is sale, appraisal, expropriation, auction (referring to an auction under the Civil Procedure Act; hereinafter the same shall apply in this paragraph) or public auction during the period from six months (three months in the case of donated property) before the base date of appraisal to the return of the tax base of inheritance tax or the return of the tax base of gift tax:

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

(2) Where the value to be considered as the market price under the provisions of paragraph (1) is two or more, it shall be based on the value corresponding to the date of evaluation.

(c) Markets:

(1) Determination on the appraisal value per share before the capital increase

According to Article 39 (1) of the Inheritance Tax and Gift Tax Act and Article 29 (2) of the Enforcement Decree of the Act, the value of deemed donation (the value per share before capital increase x the total number of issued stocks before capital increase x the number of issued stocks) ± (the number of issued stocks before capital increase x the number of increased by capital increase) ± (the number of issued stocks before capital increase + the number of issued stocks) ± (the number of issued stocks before capital increase + the number of issued stocks increased by capital increase) / (the number of issued stocks before capital increase + the number of issued stocks increased by capital increase) / the number of issued stocks in excess of the number of issued stocks to be allocated shall be calculated by multiplying the calculated amount by the number of issued stocks of the person who is allocated in excess of the number of issued stocks under equal conditions. With respect to the method of evaluation on the value per share before capital increase, the term "those recognized as market price under the conditions as prescribed by the Presidential Decree" in Article 49 (1) of the Enforcement Decree of the Act shall be excluded.

In full view of the above provisions, the assessment value per share before and after the date of donation may be based on the transaction amount if there is an event of sale and purchase of the relevant shares for three months before and after the date of donation. From June 14, 1999, the date of the first capital increase to June 26, 1999, the Plaintiff transferred 28,149 shares among the shares acquired by the Plaintiff from June 17, 199 to June 26, 199 to Nonparty 15,000 shares per share. The Defendant’s assertion that the Plaintiff traded 40,000 shares per share from July 30, 199, the third capital increase of which was 3 days after July 30, 1999. Thus, the Defendant’s allegation that the Plaintiff’s share increase on August 2, 199 to Nonparty 2, the date of appraisal, which was near the date of appraisal, is without merit.

(2) Whether the issue price at the time of the instant fourth capital increase includes the price for transferring the right of management

According to the evidence evidence No. 15, when the plaintiff makes the fourth capital increase in this case to the non-party 2 corporation, the non-party 2 corporation bears the duty of prior consultation and post-management notification when it comes to list on the KOSDAQ, a merger, and a new company to the non-party 2 corporation, and when it is deemed that the management status becomes worse or there is a need for other management, the non-party 2 corporation may dispatch its employees or experts, conduct inspections or management diagnosis on the subordinate accounting and overall business, and enter into a new stock acquisition contract stipulating the duty to repurchase shares in the event that the plaintiff fails to perform the contract. However, the shares acquired by the non-party 2 corporation are 50,000 shares, which are 49,90% of the total number of shares after the capital increase, and did not participate in the decision-making process of the plaintiff, such as dispatching directors while acquiring new shares, etc., it is difficult to view that the plaintiff transferred part of the management right to the non-party 2 corporation to prepare safety devices to prevent the plaintiff from becoming insolvent after acquiring new shares (the non-party 2 corporation).

Therefore, the plaintiff's assertion on this part is without merit that the appraisal value per share before the capital increase is illegal on the premise that the price for the transfer of the right of management is included in the issue value of the fourth capital increase at the time of the capital increase in this case.

3. Conclusion

Thus, the plaintiff's claim shall be dismissed as it is without merit.

Judges Lee Jung-young (Presiding Judge) (Presiding Justice)