The burden of proving the market price for the object of wrongful calculation that has been transferred to the low price.

In light of the fact that the appraisal value assessed by the bank is the amount derived from the result of a price negotiation, etc., it cannot be deemed that the market value can be formed in general and ordinary transactions where the principal and special contractual relationship and dispute are not involved in the transaction of the instant shares.

2012Guhap5246 Revocation of Disposition of Corporate Tax Imposition

AAA Limited Liability Company

Head of Busan District Tax Office

October 30, 2013

January 22, 2014

1. The disposition of imposition by the Defendant against the Plaintiff on May 1, 2009 of the corporate tax belonging to the business year of 2004 shall be revoked.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. BB (hereinafter referred to as "B") on October 8, 1999, sold to the Plaintiff the heat cogeneration generation facilities (hereinafter referred to as "facilities of this case") which are the main facilities among petroleum chemical production plants located in OB at OB at OB, and BB, under the cooperation of the Plaintiff on September 8, 2004, acquired all shares issued by the Plaintiff from OB (hereinafter referred to as "stock transaction" of this case"); (c) on the premise that the Plaintiff transferred its assets to 2000,000 won, including the Plaintiff and the instant facilities, to 200,000 won under the control of 20,000,000 won (hereinafter referred to as "O20,000 won") under the control of 20,000 won (hereinafter referred to as "O20,000 won") under the control of 20,000 won (hereinafter referred to as "O20,000 won") prior to the acquisition of the assets of the Plaintiff.

E. Accordingly, on May 1, 2009, the Defendant notified the Plaintiff of the correction and notification of the OOO of the corporate tax belonging to the business year 2004 (hereinafter “instant disposition”). F. The Plaintiff appealed against the instant disposition, but was dismissed on October 19, 2009, and again requested a judgment to the Tax Tribunal, but was dismissed on November 14, 2012.

[Ground of recognition] Unsatisfy, entry of Gap evidence 1 to 3, purport of whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the parties' assertion

1) The plaintiff's assertion

The Defendant determined that the instant asset transaction was a low-price transfer with a person with a special relationship under Article 88(1)3 of the Enforcement Decree of the Corporate Tax Act, and thus, rendered the instant disposition on the premise that the instant asset transaction constituted a transaction example under Article 89(1) of the Enforcement Decree of the Corporate Tax Act, deeming that the instant stock transaction constituted a transaction example under Article 89(1) of the said Enforcement Decree.

However, since the stock price of this case is the transaction price based on the special circumstances at the time of the transaction, it cannot be the objective exchange value of the stocks at the time of the transaction of this case or the assets at the time of the transaction of this case. In addition, where the market price is unclear because there is no transaction example example as above, the appraisal value of the appraisal corporation under Article 89 (2) 1 of the Enforcement Decree of the Corporate Tax Act, which provides for the supplementary evaluation method of the market price, or the appraisal value of the inheritance tax and gift tax (hereinafter "evaluation value under the Inheritance Tax and Gift Tax Act") under Article 89 (2) 2 of the Inheritance Tax and Gift Tax Act, shall be applied successively to the appraisal value of the assets at the time of the transaction of this case. However, since the stock price of this case assessed by the bank does not fall under the appraisal value of the appraisal corporation under subparagraph 1 above, the market price of the assets at the time of the transaction of this case shall not be deemed to fall under the appraisal value under the above subparagraph 2 of the Inheritance Tax and Gift Tax Act.

"The asset transaction of this case was conducted between BB and B having become a specially related person by acquiring 100% of the Plaintiff's shares, and only one month, and the price of KRW 117.4 billion, which is the stock transaction price of this case, properly reflects the Plaintiff's business value. Although the object and legal form of the transaction are different, the economic substance is identical in terms of "merger of enterprises". Thus, it is reasonable to view that the OOO which is added by the net asset increase amount to the OOO of the stock transaction of this case, is the transaction example as stipulated in Article 89 (1) of the Enforcement Decree of the above Act. Thus, the disposition of this case is legitimate even though the market price of the assets of this case was an OO," and the related

The entries in the attached Table-related statutes are as follows.

(i) the conclusion and terms of the Energy Supply Agreement (ESA);

“A) On December 27, 1999, after the sale of the instant facilities, BB entered into an energy supply contract (Eergy Sales A, hereinafter “ESA”) under which the Plaintiff would exclusively be supplied with the entire amount of steam, electricity, etc. produced from the instant facilities for twenty (20) years from the Plaintiff. BB cannot produce steam through its own facilities (Article 2.1).

"(d)(ii) and other third parties (Article 3.1.(d)(f) may not enter into an electricity purchase agreement (Article 3.1.1.(d)(f)), and the Plaintiff is entitled to require BB to repurchase the instant facilities (hereinafter "resale option") in consideration of the interest rate, investment deposit, and opportunity cost, etc. of the purchase price of the instant facilities at the OOOOwon in the event B violates the ESA or facility access agreement (Article 11.2) and (2) the occurrence of disputes and the process of agreement between the Plaintiff and BB.

A) On April 14, 2003, if the Plaintiff violated the ESA clause, etc. listed above in the process of receiving energy from the Plaintiff, the Plaintiff filed a claim for damages with the International Chamber of Commerce and Industry arbitration court, and filed an application for commercial arbitration demanding BB to repurchase the instant facilities to the AO by exercising a re-sale option.

B) Specific details of the above OOO units calculated on the basis of the ESA are as follows:

See 6 pages of the judgment

C) After that, BB reviewed the Plaintiff’s acceptance, and during that process, on January 9, 2004, 2004, requested the Plaintiff to assess the Plaintiff’s business value, based on the base price, the OOO value, which is the purchase price for the instant facilities, presented by Han Bank Co., Ltd. (hereinafter “IB”) on the part of the Plaintiff. The value is based on the analysis that is cash flow.

In the event that the plaintiff won the case in the arbitration application, the price of the stock transaction in this case was determined as OOO's won in consideration of the plaintiff's expected value." Then, BB and CCC agreed to the basic acquisition price of the stock in this case as OO's intervention in the negotiation of one bank. The above OOO's agreement agreed to determine cash assets and liabilities as the driver's principal and to deduct the acquisition debt.

E) On June 18, 2004, at the third regular meeting held on June 18, 2004, BB decided that the purchase plan of the instant facilities will be presented as the agenda and that it will be merged after acquiring the Plaintiff’s shares, and that it will be merged before the business division. On October 4, 2004, the fourth regular meeting held on October 4, 2004 approved the Plaintiff’s integration, thereby integrating the Plaintiff into OOO level and transfer method.

F) In the course of the instant stock transaction on September 8, 2004, the Plaintiff and B agreed to withdraw the application for arbitration filed by the Plaintiff against BB and to waive all the exercise of rights on the ground of the violation of BB’s ESA in the future. On September 23, 2004, the Plaintiff withdrawn the application for arbitration filed with the International Chamber of Commerce and Industry International Court of Arbitration.

(iii) Other

A) Meanwhile, on October 18, 2004, the Plaintiff held a temporary general meeting of members and passed a resolution on the case of approval for the transfer of the assets of this case and the case of resolution for dissolution, and completed the registration of dissolution on November 1, 2004.

B) According to the Plaintiff’s agreement on the assessment of shares on December 22, 2004, the Plaintiff’s net assets are OOOwons and OOOwons for the assessment value under the Inheritance Tax and Gift Tax Act.

[Reasons for Recognition] Gap evidence Nos. 6, Eul evidence Nos. 4, 8, 11, 17, and 18 (including branch numbers), the purport of the whole pleadings

D. Determination

1) Relevant regulations and legal principles

Article 52 (1) of the Corporate Tax Act provides that where the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office deems that the tax burden of a domestic corporation has been unjustly reduced through a transaction with a person with a special relationship as prescribed by the Presidential Decree (hereinafter referred to as a "specially related person"), the income amount of the corporation for each business year may be calculated regardless of the act or calculation of the income amount of the corporation (hereinafter referred to as "unlawful calculation"). In the application of the provisions of paragraph (1) of the same Article, Article 52 (2) of the Corporate Tax Act provides that the calculation of the income amount of the corporation shall be based on sound social norms and common practices and prices applied or deemed applicable in normal transactions between a person with a special relationship (including rates, interest rates, rents, exchange rates, and other similar rates; hereafter referred to as "market price" in this Article). In addition, Article 88 of the Enforcement Decree of the Corporate Tax Act provides that where a stock-listed corporation continuously trades stocks with or without compensation at a lower price than the market price of the corporation.

Article 52 of the Corporate Tax Act provides that “The rejection of unfair calculation under Article 52 of the Corporate Tax Act is a system that, when a corporation trades with a person with a special relationship, instead of using various forms of transactions listed in each subparagraph of Article 88(1) of the Enforcement Decree of the Corporate Tax Act, in a case where a corporation unjustly evades or reduces tax burden by unfairly evading or reducing tax burden, it shall be limited to a case where the taxing authority denies it and deemed that there was an income objectively and reasonably reasonable by the method prescribed in the statutes. In light of the economic person’s perspective, it shall be limited to a case where it is deemed that the taxing authority neglected economic rationality by making an unfavorable and unreasonable act or calculation (see, e.g., Supreme Court Decision 2008Du1541, Oct. 28, 2010). Therefore, in a case where a corporation comprehensively transfers various assets, it should not be determined whether they constitute a transfer at a low price compared to the market price of each individual asset, and whether they constitute a comprehensive transaction at the market price (see, 20. 2015Du261, etc.).

The key issue of the instant case is whether the Plaintiff’s act of transferring the instant assets to OOB at a lower price than the market price, and thus, constitutes a case where the tax burden was unjustly reduced, and whether it can be seen as the market price of the instant assets, including the net asset increase amount and the OOwon, before the date of transfer, can be deemed as the market price of the instant assets.

In light of the fact that the Plaintiff requested compensation for violation of the ESA and the re-purchase of the facilities of this case to the arbitral court, and that at that time, BB chosen the method of acquiring the Plaintiff, including the facilities of this case, to be supplied with energy from the facilities of this case and to defend the Plaintiff’s request for arbitration in a stable situation where it is impossible to confirm the result of the arbitration, as at that time, BB selected the method of acquiring the Plaintiff, including the facilities of this case. First of all, from the BB, BB proposed this first to the Plaintiff, and then made an agreement that BB would withdraw the Plaintiff’s claim for arbitration; ② In addition, the transaction price of the stocks of this case was caused by the dispute regarding the violation of the ESA between the Plaintiff and B; ② the transaction price of the stocks of this case was the amount derived from the demand provision for re-purchase as set forth in the ESA and the market price of the facilities of this case; thus, it is difficult to view the general and special transaction price of the stocks of this case as the general and market value of this case.

Therefore, from the above different point of view, the instant disposition taken on the premise that the above OOO member is deemed the market price of the instant assets corresponding to the general example of business transaction as stipulated in Article 89(1) of the Enforcement Decree of the Corporate Tax Act in relation to the instant asset transaction shall be revoked as it is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.