Seoul Administrative Court 2009Gudan7595 ( September 25, 2009)

early 2009west065 ( October 27, 2009)

Whether stock transfer is subject to the avoidance of wrongful calculation;

Even if non-listed stocks are transferred at a low price in one won to a person with a special relationship by means of being repaid loans, it constitutes a trend of increase in the value of stocks every year as a corporation holding real estate and constitutes a corporation holding stocks at a low price.

The contents of the decision shall be the same as attached.

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s disposition of imposing KRW 34,340,950 on the Plaintiff on November 1, 2008 shall be revoked.

2. Purport of appeal

It is the same as the disposition.

1. Details of the disposition;

A. The plaintiff acquired and held 24,00 shares of 50,000 shares of 50,000 won (hereinafter referred to as "the shares of this case") among the shares of 50,000 won (capital 500,000 won) at a par value of AA Distribution Co., Ltd. (hereinafter referred to as "A Distribution"), and transferred 24,000 won per share to Dong Jae KimB on March 30, 2004 and reported the transfer to the defendant (Evidence 2, 3, and 3).

(B) On November 1, 2008, "The plaintiff, as a result of the on-site investigation of the transfer shares, transferred the shares of this case to the partner who is a specially related party, and thus subject to the avoidance of wrongful calculation," the above transfer value is denied, and the transfer value of the shares of this case was calculated as KRW 19,815 per share in accordance with the supplementary evaluation method provided by Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18989 of Aug. 5, 2005, hereinafter referred to as the "Enforcement Decree"), and the disposition imposing capital gains tax of KRW 34,340,950 for the plaintiff (hereinafter referred to as the "disposition of this case") was made [No. 1 evidence, No. 1, 2], and the plaintiff on Nov. 21, 2008 [No. 1, 2009].

2. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

A. In light of the developments leading up to the acquisition and transfer of the instant shares and the financial status of AA distribution, the instant transfer of shares constitutes a normal act with economic rationality in light of social norms or transaction practices, and thus cannot be deemed as subject to the avoidance of wrongful calculation under the Income Tax Act.

B. The Defendant calculated the transfer value of the instant shares at KRW 19,815 per share on the basis of the net asset value of AA distribution and net profit and loss value of the three business years immediately preceding the business year in which the date of the transfer of the instant shares falls (from April 1, 2000 to March 31, 2003) in accordance with the supplementary evaluation method stipulated in Article 54 of the Enforcement Decree. However, the Plaintiff transferred the instant shares on March 30, 2004, before the end of the business year 2003 and the day before the end of the business year 2003, and the Plaintiff acquired the instant shares at KRW 30,000 per share during the period from April 1, 203 to March 30, 204, it is reasonable to calculate the transfer value of the instant shares at KRW 30,00 per share, including the business year 203 (from April 1, 2001 to March 31, 2004).

3. Relevant statutes;

Attached Form is as shown in the attached Form.

4. Whether the instant disposition is lawful

(a) Facts of recognition;

AA Distribution is a corporation that owns 36-2 CCC and operates one story among the 30-2 building units located in Yeongdeungpo-gu 30.4,000 won for each of the 30-1,000,000 won for each of the 30-1,000,000 won for each of the 20-1,000,000 won for each of the 30-2,000,000 won for each of the 20-1,000,000 won for each of the 30-4,000,000 won for each of the 20-6,000,000 won for each of the 30-6,000,000 won for each of the 30-4,000,000 won for each of the 30-6,000,00 won for each of the 2,04,000 won for each of the instant shares.

(b) Whether the transfer of shares in the instant case is subject to the avoidance of wrongful calculation;

Even if a resident’s act or calculation is consistent with objective facts and legal validity and lawful, it is intended to realize fair taxation by supplementing the principle of substantial taxation through the legal fiction of income objectively reasonable if the transaction constitutes a transaction type between a person with a special relationship who unfairly reduces tax burden. Thus, the wrongful calculation is sufficient if a transaction between a certain person with a special relationship cannot be deemed a normal transaction, and thus it is deemed that a reasonable economic person has unreasonably reduced tax burden because the transaction between a certain person with a special relationship cannot be deemed a transaction, in light of social norms and customs, and thus, it does not require any tax avoidance or economic loss (see, e.g., Supreme Court Decision 200Du1799, Jan. 11, 2002).

As seen earlier, the Plaintiff’s act of transferring KRW 24,00 per share to KimB in the special control line under Article 98(1)1 of the Enforcement Decree of the Income Tax Act, even if the value per share is 19,815 won or more according to the supplementary assessment method under Article 54 of the Enforcement Decree of the “Enforcement Decree” to the KimB, located in the special control line under Article 98(1)1 of the Enforcement Decree of the Income Tax Act, is deemed to lack of economic rationality in light of the overall circumstances such as the ownership of real estate and the possession of real estate in excess of about 3 billion won per share, where the AA distribution has increased every year’s value. Therefore, it is reasonable to deem that a low-price transfer transaction between related parties lacks economic rationality in light of social norms and customs, and it is not a normal transaction.

Therefore, the Plaintiff’s transfer of shares constitutes “when assets are transferred to a person with a special relationship at a price lower than the market price” as the type of wrongful calculation under Article 98(2)1 of the Enforcement Decree of the Income Tax Act.

(c) The market price of the stocks;

If the transfer of unlisted stocks is based on a wrongful calculation, the acquisition value or transfer value shall be calculated by the market price pursuant to Article 167(4) and (5) of the Enforcement Decree of the Income Tax Act, and such market price shall be calculated by applying mutatis mutandis the provisions of Article 63 of the Inheritance Tax and Gift Tax Act and Articles 54 through 56 of the Enforcement Decree thereof, i.e., the weighted average value of net profit and loss per share for the preceding three years, and the net value of the net profit and loss per share for the preceding three years x 3) + (see, e.g., the net profit and loss per share for the preceding two years before the base date of appraisal) + (see, e., e., e., e., 6th net profit and loss per share for the preceding two years : 30 years x2th of the base date of appraisal) + (the average profit and loss per share for the preceding three years : 40 years x 13th of the business year before the base date of appraisal).

5. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the disposition of this case is dismissed as it is without merit, and the judgment of the court of first instance is unfair, and it is so revoked, and the plaintiff's claim is dismissed. It is so decided as per Disposition.