Twit Entertainment Co., Ltd. (Law Firm Squa, Attorneys Kim Tae-hee et al., Counsel for the plaintiff-appellant)

The head of Jongno-gu Seoul Metropolitan Government (Law Firm Professor, Attorneys Cho Jong-he et al., Counsel for the plaintiff-appellant)

July 8, 2016

Seoul Administrative Court Decision 2015Guhap509 decided September 3, 2015

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The Defendant’s disposition of imposition of KRW 558,348,230,00 in total, including acquisition tax of KRW 483,779,630, and local education tax of KRW 61,929,780, and special rural development tax of KRW 12,638,820, which was imposed by the Plaintiff on September 11, 2011 against the Plaintiff on October 10, 2011, shall be revoked.

1. Quotation of the reasons for the judgment of the first instance;

This judgment is based on the reasoning of the judgment of the court of first instance, except for the addition of the following matters among the reasons for the judgment of the court of first instance, and thus, it is based on Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of

(1) On the 6th page 13, the following shall be added:

In addition, the meaning of “a case where the succeeded business is discontinued” is not limited to “a case where the succeeded business is disposed of at least 1/2 of the value of the fixed assets acquired by succession from the merged corporation or is not used for the business” as stipulated in Article 80-4(8) of the Enforcement Decree of the Corporate Tax Act, and it should also be deemed that all the fixed assets used for the business related to the succeeded business

(2) On the 6th page 15, “The Plaintiff’s disposal of the securities investment business was followed,” and thereafter, “The Plaintiff alleged to have succeeded to the securities investment business other than the real estate rental business, but the evidence submitted by the Plaintiff alone was insufficient to prove that the corporation prior to the division was engaged in the securities investment business.”

(3) On the 8th page, the following shall be added:

Meanwhile, the proviso of Article 80-4(8) of the Enforcement Decree of the Corporate Tax Act provides that “When a surviving corporation retires its own stocks after succession to the stocks of the surviving corporation held by the surviving corporation, it shall be determined whether the surviving corporation continues its business on the basis of the fixed assets succeeded by the surviving corporation except for the stocks of the surviving corporation, and where the succeeded fixed assets are only the stocks of the surviving corporation, the surviving corporation shall be deemed to continue its business.” However, the above provision assumes that the surviving corporation’s stocks succeeded may constitute fixed assets. However, in light of the above provision, the above provision is a provision on the criteria for determining the continuity of business, one of the requirements for deferment of taxation due to merger, and other relevant corporate tax laws and regulations, it shall not be deemed that the surviving corporation’s stocks succeeded to on the sole basis of the above provision constitutes fixed assets that are closely related to the continuation of business, such as where the holding company under the Monopoly Regulation and Fair Trade Act owns the stocks of the surviving corporation for the purpose of the business.” However, it is reasonable to view that the Plaintiff is not aware of securities sale securities or securities held within a short-term after the merger.

2. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and the judgment of the court of first instance shall be just and the plaintiff's appeal shall be dismissed as it is without merit. It is so decided as per Disposition.

Judges Kim Woo (Presiding Judge)