Appellate Court 2013Gu1670 (O6.24)

Since the acquisition of treasury shares is null and void, it is reasonable to consider it as a loan of funds to shareholders.

It constitutes the acquisition of treasury stocks prohibited by the Commercial Act, and the acquisition by the Plaintiff of the stocks at issue from a specially related person is null and void, so it constitutes "a case where monetary and other assets, etc. are loaned or provided with no compensation or at an interest rate lower than the market price under Article 88 of the Enforcement Decree of the Corporate Tax Act, etc." and thus constitutes the subject of

Article 341 of the Commercial Act, Article 27 of the Corporate Tax Act

2013Guhap1149 Revocation of Disposition of Imposing corporate tax

memberAA

Head of the Gu Tax Office

August 27, 2014

October 8, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's imposition of the corporate tax for the business year 2010 against the plaintiff on January 2, 2013 and the corporate tax for the business year 2011 is revoked.

1. Details of the disposition;

A. On December 26, 2007, BB-invested investment company (hereinafter referred to as “B”) entered into a share sales contract (hereinafter referred to as “the sales contract of this case”) with the Plaintiff’s shareholder,CC, D, E, E, E, and F, with the Plaintiff’s shareholder, that only the Plaintiff’s OO (D OO, EOO, FFOO, hereinafter referred to as “instant shares”) purchases the Plaintiff’s shares of KRW O00 won per share, and in certain cases BB may claim the purchase of the instant shares at the agreed sale price (hereinafter referred to as “the sales contract of this case”).

B. BB acquired the instant shares in accordance with the instant sales contract, and on December 24, 2009

The Plaintiff exercised the right to purchase the instant shares. On January 15, 2010, the Plaintiff held a temporary general meeting of shareholders and resolved to acquire the instant shares from BB, and then purchased the instant shares from BB on January 18, 201 (hereinafter referred to as “acquisition of the instant shares”).

C. The Defendant’s audit and inspection of the invalidity of the acquisition of the instant shares in lack of the requirements for acquisition of its own shares under Article 341 of the former Commercial Act (amended by Act No. 10600, Apr. 14, 2011; hereinafter the same)

On November 29, 2012, in order to impose corporate tax additionally, the following notice was given to the Plaintiff:

(A) Notice of notice of taxation result (No. 4-1)

○ Notice of Taxation in accordance with the audit and inspection matters

- Non-collection of corporate tax on legally invalid acquisition of treasury stocks

○ Pre-Announcements of Taxation (Audit Matters)

- The Plaintiff, from January 18, 2010 BB, owns OO0,00 won of its own shares until the present date after acquiring OO0,000 won of its own shares.

- The Plaintiff’s acquisition of the Plaintiff’s own shares cannot be deemed legitimate and invalid under the Commercial Act. Therefore, it shall be deemed a loan of funds to stockholders (provisional payment). This is reasonable to determine the acquisition value of the Plaintiff’s own shares as the provisional payment for BB, which is recognized by Article 52 of the Corporate Tax Act, as well as the inclusion in the gross income of Article 52 of the Corporate Tax Act and the inclusion in the deductible expenses paid in accordance with Article 28 of the Corporate Tax Act.

D. On January 2, 2013, according to the notice of taxation notice, the Defendant deemed the OOO won for the acquisition of the instant shares as a provisional payment without office (i.e., the OO won in the business year 2010 + the OO won in the business year 2011) to be excluded from the deductible expenses, and as a result, as a result of the wrongful calculation, the Defendant recognized the OO won in the business year 2010 + the OO won in the business year 2011, and notified the Plaintiff of the correction and notification (including additional taxes) of the corporate tax for the business year 2010 and the OO won in the business year 201 (hereinafter “instant disposition”).

E. On March 27, 2013, the Plaintiff appealed and requested a trial on March 27, 2013, but the Tax Tribunal on June 6, 2013

24. The ruling dismissing the request was made.

Facts that there is no dispute over the basis of recognition, Gap evidence 1 through 5, 9, and Eul evidence 1

Each entry, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff’s acquisition of the instant shares was improved by restoring its wide range of business management rights, such as not receiving management instructions from BB, etc. due to the acquisition of the instant shares, and thus, the acquisition of the instant shares cannot be deemed null and void solely on the ground that the Plaintiff

2) There is no legal basis to regard the acquisition price of the instant shares as a loan, and the Plaintiff acquired the instant shares through a resolution of a special general meeting of shareholders upon BB’s request for purchase of shares.

As such, the Plaintiff did not know that the acquisition of the instant shares is null and void, the Plaintiff did not directly commence the collection procedure and secure the means to recover the price, and it cannot be readily concluded that the Plaintiff paid the purchase price of the instant shares with the previously borrowed money, and the BB was dissolved only in the past five months after selling the instant shares to the Plaintiff and was under the possibility of actual recovery. In light of the fact that the purchase price of the instant shares did not constitute a provisional payment in office, and the Plaintiff did not collect the purchase price of the instant shares from BB without justifiable grounds, and thus, it is unlawful to exclude the interest paid from deductible expenses, and is in violation of the principle of substantial taxation.

3) In addition, the provision of the wrongful calculation shall be limited to the lawful and effective act. In light of the fact that the purchase price of the instant shares is not a loan, but a benefit in return for the acquisition of shares, and is reasonable as the market price, and that the return of the Plaintiff’s share and the Plaintiff’s return of the purchase price cannot be claimed as legal interest from BB in the simultaneous performance relationship, the acquisition of the instant shares shall be deemed an act based on a reasonable transaction form by the normal economy, and thus, it is unlawful to apply the provision of the wrongful calculation registry to recognize the acquisition price of the instant shares as inclusion

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) On December 26, 2007, the main contents of the instant sales contract that BB entered into with the Plaintiff’s shareholderCC, stuffed house, EE, and F are as follows.

4. Stockholders' contract (this case sales contract, Gap evidence 2)

○CC (A), Gambio (B), EE (A), F (hereinafter referred to as “A, B, C, C, and F (hereinafter referred to as “existing Shareholder”).

BB shall enter into this Agreement as follows:

As of the date of this contract, existing shareholders and D hold 10% of the Plaintiff’s common shares (100% of the common shares issued by the Company) as of the date of this contract.

In addition, on December 26, 2007, ○ and D, 'B' and 'B' (hereinafter referred to as 'B') entered into a share sales contract (hereinafter referred to as 'B') stipulating the terms and conditions of the transaction between BB and the seller's ordinary shares of 1 million won.

§ 2. Acquisition of Company Shares

BB acquires common shares of the Company (Plaintiff) in accordance with the terms and conditions set forth in the Stock Sales Agreement, and BB

The common shares of the company, which have been acquired by a contract of purchase and sale of shares, are called a "principal shares".

Article 12 (Other Agreements)

1. B may claim for purchase of the shares of BB at the rate of 15 per cent per annum from the date of acquisition of the shares of BB to the date of sale of the shares of this case (hereinafter referred to as "agreement purchase price"), and the purchase shall be made within 30 days from the date of receipt of the request for purchase of the shares of this case by B:

1. Where the listing on the KOSDAQ or the securities market is not made by December 31, 2009: Provided, That where the parties have agreed, the time limit for listing on the KOSDAQ or the securities market may be extended by one year;

(2) If a company fails to list on the KOSDAQ or the securities market as provided for in paragraph (1) 1 of this Article, the existing shareholders agree that the existing shareholders shall take the same effect as those provided for in paragraph (1) of Article 12 with respect to the shares held by the existing shareholders and the shares held by BB, etc. on a commercial basis: Provided, That if the relevant Acts and subordinate statutes are not permitted, a method having the same effect as those provided for in paragraph (1) of Article 12 shall be determined through subsequent consultation between the parties.

2) The Plaintiff failed to list the stocks on the KOSDAQ or the securities market by December 23, 2009, and BB demanded thatCC purchase the amount calculated by adding the amount calculated by adding 100,000 stocks of the instant case to the acquisition price and the amount calculated by adding the acquisition price to 15% per annum until the purchase date pursuant to Article 12(1) of the instant sales contract on December 24, 2009.

3) BB filed a claim for purchase of shares withCC. On January 15, 2010, the Plaintiff, in response to the said claim for purchase, held a temporary general meeting of shareholders and resolved to acquire the shares of this case. On January 18, 2010, BB purchased the shares of this case in KRW 14,676,184,449 and paid the price in full.

4) Meanwhile, on May 26, 2010, BB dissolved at the expiration of the five-year period of existence. On May 24, 2013, after receiving the notice of pre-announcement of taxation from the Defendant, the Plaintiff filed an application for conciliation against BB andCC (Seoul Central District Court 2013 SOOO, and on July 30, 2013, BB until July 31, 2013.

To transfer the right to request the issuance of shares toCC,CC has taken over the OOO members of BB’s obligation to return the purchase price to the Plaintiff, and the Plaintiff became final and conclusive as a substitute for the conciliation of “CC acquires the above obligation to return the purchase price and deliver the instant shares toCC” (However, there is no evidence to acknowledge thatCC returned the purchase price of the instant shares to the Plaintiff).

Facts that there is no dispute for recognition, described in Gap evidence 2, 3, 8, 9 (including each number), witness

Part of GG Testimony, the purport of the whole pleadings

D. Determination

1) Determination on the first argument

As a matter of principle, the Commercial Act prohibits a stock company from acquiring its own shares on its own account, and exceptionally stipulates that its acquisition shall be allowed only in certain cases. Therefore, except where Articles 341, 341-2, and 342-2 of the Aviation Act explicitly permits the acquisition of its own shares, the acquisition of its own shares is not allowed unless it is formally evident that it may not endanger the foundation of the company's capital or undermine the interests of shareholders, etc., and any agreement that the company acquires or plans to acquire its own shares in violation of the prohibition provision as above is null and void (see, e.g., Supreme Court Decisions 2005Da75729, Oct. 12, 2006; 2001Da4109, May 16, 2003).

In accordance with the above facts of recognition and the relevant laws and regulations, and each of the above evidences, the following:

(1) Section 1 of Article 12 of the sales contract of this case provides forCC, not the plaintiff, as the other party entitled to claim the purchase of the shares of this case, and Section B of the said contract provides for BB as the other party.

The plaintiff exercised the right to purchase the shares of this case. The plaintiff acquired the shares of this case from BB; ② the plaintiff's acquisition of the shares of this case does not constitute "the time when the shareholders exercise their appraisal rights" under Article 341 subparagraph 5 of the former Commercial Act; ③ also, "the time necessary to achieve the purpose in exercising the rights of the company" under Article 341 subparagraph 3 of the former Commercial Act refers to the case where the company acquires its own shares by auction or by payment in kind when the company does not own its own shares in order to enforce its rights (see Supreme Court Decision 2005Da75729, Oct. 12, 2006). Thus, the plaintiff's acquisition of shares of this case from BB could not be deemed to constitute a time necessary to achieve the purpose in exercising its rights; ④ The plaintiff's acquisition of shares of this case constitutes an exceptional acquisition of treasury shares permitted under the former Commercial Act, etc.

2) Second, determination on the third argument

A) The provisional payments of non-deductible interests under the Corporate Tax Act include not only purely meaningful loans, but also loans corresponding to the nature of claims such as indemnity bonds. Whether they are related to the business is based on the purpose of business or business contents of the relevant corporation.

It should be objectively determined that delay in the collection of the purchase price to be paid by a person with a special relationship without any justifiable reason brings the same effect as that of the provisional payment after the full recovery of the purchase price was made within the time limit for the performance of contractual obligations, and thus, the amount equivalent to the outstanding purchase price falls under "provisional payment, etc. paid without connection with the business" under Article 28 (1) 4 (b) of the Corporate Tax Act and the interest paid on the loan corresponding thereto is not included in deductible expenses. In addition, in a case where a delay in the collection of the purchase price is deemed to reduce the tax burden unfairly due to a lack of economic rationality in light of sound social norms and commercial practices, Article 52 of the Corporate Tax Act and Article 88 (1) 6 of the Enforcement Decree of the Corporate Tax Act are deemed to have been included in gross income (see, e.g., Supreme Court Decisions 2005Du1558, Oct. 26, 2006; 207Du5646, Jan. 14, 2010).

B)First, according to the facts of recognition of the Ministry of Health and Welfare as to whether the acquisition price of the instant shares constitutes a provisional payment in office, BB constitutes a person with special relationship as a shareholder of the Plaintiff, and the acquisition price of the instant shares by the Plaintiff is null and void in violation of Article 341 of the former Commercial Code. Thus, the acquisition price of the instant shares paid by the Plaintiff to BB is paid without any legal cause.

High Court Decision 201Do4148 delivered on May 2, 2012, 201 held that the Plaintiff’s share acquisition price of this case was null and void, and that the Plaintiff did not take any measures to recover the share acquisition price of this case from BB before the Defendant received the notice of prior notice of taxation, and thus, BB was dissolved at the expiration of the period of existence. Thus, the Plaintiff’s share acquisition price of this case shall be deemed a provisional payment regardless of its business, and the Plaintiff did not know that the share acquisition price of this case was null and void, or that BB dissolved only five months after the date of the sale of this case cannot be deemed a justifiable reason for the delay in recovery of the Plaintiff’s share acquisition price. Therefore, it is legitimate that the Defendant

C) Next, according to the above facts, it is reasonable to view that the delay in the collection of the purchase price of the instant shares is subject to the avoidance of unfair calculation, and that the purchase price of the instant shares paid by the Plaintiff to BB is to be immediately recovered since it was paid without any legal cause. Thus, it is legitimate to view that the Plaintiff’s failure to recover the purchase price of the instant shares from BB orCC on January 18, 2010, without any justifiable reason, is an abnormal act contrary to the economic rationality in light of sound social norms and commercial practice, and thus, it is against Article 88(1)6 and 9 of the Enforcement Decree of the Corporate Tax Act, as it constitutes “a case where money or other assets are lent or provided without compensation or at an interest rate lower than the market price, or any other similar act.” Therefore, it is legitimate to deem that the Defendant’s inclusion in the calculation of the acquisition price of the instant shares in the calculation of the recognized person, and this part of the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.