A. Whether the written request for correction under Article 63(1) of the Framework Act on National Taxes is effective only when the other party reaches the other party (negative)

B. Whether the amount of free share is included in the "value of assets received without compensation" under Article 15 (2) of the former Corporate Tax Act (No. 2931, Dec. 22, 1976) (negative)

A. Article 52(1) of the Enforcement Decree of the Framework Act on National Taxes only provides the method of request for correction, and it does not mean that the request for correction must reach the other party, but it takes effect. Thus, notwithstanding the provisions of Article 52(1) of the Enforcement Decree of the Framework Act on National Taxes, the request for correction under the provisions of Article 63(1) of the Framework Act on National Taxes shall take effect only if the content of the expression of intent reaches the other party by verbal or telephone, and it shall take effect only if the written request for correction reaches the other party.

B. The phrase "value of assets received without compensation" under Article 15 (2) of the former Corporate Tax Act (Act No. 2931 of Dec. 22, 1976) is interpreted as "value of assets received without compensation" as "value of assets increased by acquiring assets without compensation as a donee." Thus, the amount of free share dividends received by the plaintiff from the investment corporation by transferring assets revaluation reserve from the investment corporation to capital shall be deemed as a fruit income for investment as consideration for investment, and it shall not be deemed as "value of assets received without compensation" as mentioned above.

(a) Article 63(1) of the Framework Act on National Taxes; Article 52(1) of the Enforcement Decree of the same Act; Article 15(2) of the former Corporate Tax Act (Act No. 2931, Dec. 22, 1976); Article 12(1)6 of the Enforcement Decree of the Corporate Tax Act; Article 28 of the Assets Revaluation Act

Supreme Court Decision 79Nu22 Decided April 10, 1979, 80Nu150 Decided September 9, 1980, Supreme Court Decision 81Nu86 Decided July 12, 1983

Attorney Park Jong-soo, et al., Counsel for defendant-appellee

Head of Seodaemun Tax Office

Seoul High Court Decision 81Gu177 delivered on May 10, 1983

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal by the defendant litigant are examined.

With respect to No. 1:

Article 52 (1) of the Enforcement Decree of the Framework Act on National Taxes provides that the request for supplement and correction under the provisions of Article 63 (1) (including cases applied mutatis mutandis under Article 81) of the same Act shall be made in writing stating the matters to be corrected, the reasons for the request for supplement and other necessary matters, and it shall not be deemed that the request for supplement and correction shall take effect only once it reaches the other party. Thus, the request for supplement and correction under the provisions of Article 63 (1) of the same Act applied mutatis mutandis in cases of request for adjudgment under Article 81 of the Framework Act on National Taxes shall take effect if the contents of the request for supplement and correction reach the other party by oral or telephone, etc. notwithstanding the provisions of Article 52 (1) of the Enforcement Decree of the same Act, it shall take effect only after the written request for supplement and correction have arrived at the other party (see, e.g., Supreme Court Decisions 79Nu22, Apr. 10, 197; 80Nu150, Sept. 9, 1980).

With respect to the second ground:

The judgment of the court below is revoked by adding the amount of KRW 413,739,498, which was appropriated for compensating for losses brought forward among the loss brought forward (the loss brought forward in the business year of 1976) received by the non-party company from the non-party investment corporation, the investment corporation, in the business year of 1977 (from January 1, 1977 to December 31), to the amount of compensation for losses brought forward under Article 15 (2) of the Corporate Tax Act (Act No. 2931 of December 22, 1976) at the time of the business year, as the amount of money appropriated for compensating losses brought forward, not to be included in the gross income in calculating the income amount in the business year, but to the amount of compensation for losses brought forward in addition to the amount of income in the business year of the plaintiff corporation in question.

However, the phrase "value of assets received without compensation" under Article 15 (2) of the Corporate Tax Act at the time is interpreted to mean the increased assets acquired without payment as a donee. Since the dividend amount received by a corporation by transferring the reserve fund for asset revaluation from the investment corporation to the capital shall be deemed as the fruit income from investment as consideration for investment. Thus, it shall not be deemed that the value of free share received by the plaintiff from the non-party company as an investment corporation is the value of assets received without compensation under Article 15 (2) of the Corporate Tax Act at the time of original sale received by the plaintiff from the non-party company (see Supreme Court Decision 81Nu86, Jul. 12, 1983).

The court below, on the ground that the value of the assets received without compensation from the invested corporation is deemed to be its value of the assets received without compensation from the invested corporation, based on the value of the assets received without compensation under Article 12 (1) 6 of the Assets Revaluation Act, shall be the normal price to be required when the assets are purchased from others on the date on which the assets are received: Provided, That the amount calculated by multiplying the increased capital amount by the ratio of the stocks or equity shares received by the invested corporation concerned, the increased value of the stocks or equity shares received by the investing corporation under the Assets Revaluation Act shall be the amount calculated by multiplying the increased capital amount by the ratio of the stocks or equity shares received by the invested corporation. Article 28 of the Enforcement Decree of the Corporate Tax Act (amended as of December 31, 1974, and the proviso of Article 969 of the Enforcement Decree of the Corporate Tax Act was deleted) provides for the method of assessing the value of the assets received without compensation, and it cannot be deemed that the method of evaluating the value of the assets received by the invested corporation without compensation under the same Article 15 (2) of the Corporate Tax Act.

The court below, on the ground of the proviso of Article 28 of the Enforcement Decree of the Corporate Tax Act, deemed that the face value of free share received by the Plaintiff from an investing corporation in the business year of 1977 falls under the value of assets received without compensation as stipulated in Article 15 (2) of the Corporate Tax Act at the time, and revoked the Defendant’s tax disposition in this case, which added the amount appropriated for preserving losses carried forward to gross income, was based on the misapprehension of the legal principles as to the value of assets received without compensation and the proviso of Article 28

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon Il-young (Presiding Justice)