Seoul Administrative Court-2012-Gu Group-21317 ( March 31, 2013)

Whether the acquisition value is recognized where the exchange contract is cancelled after the stocks acquired by the exchange contract are transferred.

In the event that the Plaintiff to whom ownership of shares was transferred through an exchange contract disposes of the shares of this case before the cancellation of the contract and thus making it impossible to return originals due to the cancellation of the contract, the value as the compensation at the time of the disposition shall be deemed to have been made, barring any special circumstances. Therefore, in this case, it is difficult to deem that the loss from transfer occurs

Seoul High Court 2013Nu2551

AA

BB

Seoul Administrative Court 2012Gudan21317

2014.07.25

2014.08.29

1. The plaintiff's appeal is dismissed.

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

The decision of the first instance court shall be revoked. The disposition of imposition by the Defendant on August 1, 201 against the Plaintiff on August 1, 201 is revoked: P., Trade Income Tax for the year 2004.

I. Details of the disposition;

A. The Plaintiff transferred the shares held as follows to the Defendant in 2004, and on November 4, 2008, declared that the loss from transfer occurred and the loss from transfer did not amount to transfer.

Stocks

Number of Stocks

Transfer Date

Transfer Value

Acquisition Value

Transfer Profit and Loss

QQ

80,456

204.9.21

00,000,000

W

461,127

204.9.21

-0,000,000,000

EE

3,125

December 23, 2004

0

Aggregate:

-0,000,000,000

B. On September 21, 2004, the Defendant transferred 80,456 shares of SSS Co., Ltd. (hereinafter referred to as “S 1S”) to the non-listed stock company (hereinafter referred to as “BS H”), and on December 23, 2004, 3,125 shares of the GRGR Co., Ltd. (hereinafter referred to as “GR”) (hereinafter referred to as “GR”), a non-listed stock company, to the GG for 100,000,000 won, and calculated the acquisition value of 00,000 won, and thereafter on August 11, 201, 201, the Plaintiff transferred 200,000 won shares to the Plaintiff, but did not recognize that the Plaintiff transferred the shares to the Plaintiff (hereinafter referred to as “the Plaintiff’s 1,200,000 won shares transferred to the Plaintiff (hereinafter referred to as “the Plaintiff’s shares transferred to the Plaintiff”).

1. October 27, 201: (a) filed an appeal with the Tax Tribunal, but was dismissed on June 8, 2013.

Facts without dispute over the basis of recognition, Gap evidence 1 through 4, Eul evidence 1 (including number in each documentary evidence, hereinafter the same shall apply), and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

(a) Related Acts and subordinate statutes;

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

(b) Fact of recognition;

"(1) The plaintiff is the representative director and the largest shareholder of the OO Telecom Co., Ltd. (OOO) on May 8, 2001, as the majority shareholder** on May 8, 2001, the plaintiff transferred 2.5 million shares of the OOO owned by the plaintiff to **.* paid 4 billion shares of the 1 million among them, and the remaining 1.5 billion shares as 6 billion won in consideration of the value of the 1.5 billion shares as 6 billion won in consideration of the remaining 1.5 billion shares as ** the agreement that the 1.5 million shares will be exchanged with 54905 shares (hereinafter the exchange agreement in this case)." (2) The plaintiff paid 2.5 million shares of the OO * On May 31, 2002 only the 1 million shares of the 1 million shares among them to the Director of the J Tax Office on May 31, 2002.

"(3) However, the plaintiff filed a lawsuit against the plaintiff on January 19, 2008, the Seoul High Court Decision 2007Nu17047 Decided January 19, 2008, which declared that the above A had retroactively lost the validity of the contract due to the violation of the exchange agreement among the share transfer contracts, and thus claimed for a refund of transfer income tax already paid to the chief of the J Tax Office. However, the chief of the J Tax Office rejected this request and imposed the plaintiff KRW 00,000,000 as to the transfer of the above 1.5 million shares additionally." (4) The plaintiff filed a lawsuit against the plaintiff. The decision of Seoul High Court 2007Nu17047 decided on January 19, 208 that the A had terminated the share transfer contract, and accordingly, the chief of the J Tax Office refunded the plaintiff the above KRW 00,000,000,000.

Facts that there is no dispute over recognition, entries in Gap evidence 2 through 4, 6, and 7, and the purport of the whole pleadings.

C. Determination as to the assertion that the Plaintiff is the transferor

(1) The plaintiff's assertion

The Plaintiff’s disposal of the shares of this case, which was kept in order to secure the claim in relation to the damages not returned due to the foreign flight, should be deemed subject to capital gains tax as long as the sales contract was concluded to transfer the shares of this case with BSKH for a price.

(2) Determination

Article 88 of the former Income Tax Act (amended by Act No. 7120 of Jan. 29, 2004, hereinafter the same) provides that "transfer subject to capital gains tax means that the assets are actually transferred for price due to sale, exchange, investment in kind in a corporation, etc. regardless of the registration or enrollment of the assets." (B) The plaintiff entered into the exchange contract of this case on May 8, 2001 and acquired the main ceremony of this case from ** on September 21, 2004, and thereafter sold them to SHH on September 21, 2004, and * The plaintiff's subsequent cancellation of the exchange contract of this case is the same as the above. Meanwhile, under the proviso of Article 548 (1) of the Civil Act, even if the contract is lawfully rescinded, the plaintiff did not infringe the third party's rights, and therefore the plaintiff's cancellation of the exchange contract of this case, the plaintiff's transfer of stocks from H8 of this case's stocks, therefore the plaintiff's transfer of this case's stocks is not definite.

D. Determination on the Plaintiff’s assertion of transfer loss

(1) The plaintiff's assertion

In return for the acquisition of the shares of this case, the Plaintiff transferred 1.5 billion won of the shares of EE to ** after evaluating 1.5 billion won of the shares of EE to 6 billion won, so the acquisition value of the shares of this case falls under 6 billion won, and 0000000 of the shares are transferred to BSKH, the difference shall be recognized as losses from transfer.

(2) Determination

(A) First of all, we examine whether the Plaintiff transferred EE shares 1.5 million won in return for the acquisition of the shares from the Plaintiff*** the fact that the exchange contract between the Plaintiff and the Plaintiff has been lawfully rescinded is as seen earlier, and shares, the ownership of which was changed due to the implementation of the contract, are naturally returned to the Plaintiff without the contract (see, e.g., Supreme Court Decisions 94Da1881, May 12, 1995; 91Da9503, Nov. 12, 1991; 91Da9503, Nov. 12, 1991); and the Plaintiff’s return to the Plaintiff simultaneously with the cancellation of E shares 1.5 million won in return for the acquisition of the shares. Accordingly, in this case without any assertion or proof of other circumstances, the value of the shares above ** the acquisition value of the shares paid to the Plaintiff in return for the shares. Therefore, the Plaintiff cannot be deemed as necessary expenses for the transfer of the shares.

(B) If the contract is cancelled later, based on the assessment under the tax law on the transfer of assets.

In light of the legal principles as seen earlier, if the transferor cancels a sales contract or fulfills the conditions of rescission, the above sales contract is retroactively null and void, and the transfer is not carried out, so it cannot be deemed that there was a transfer of assets, which are tax requirements for capital gains tax (see, e.g., Supreme Court Decisions 83Nu243, Mar. 12, 1985; 88Nu8609, Jul. 11, 1989). Thus, insofar as the Plaintiff cancels the instant exchange contract, the Plaintiff cannot be deemed to have transferred 1.5 million stocks to * under the tax law, and the Plaintiff was actually refunded capital gains tax for the transfer of stocks. Accordingly, even in the evaluation under the tax law, there is no acquisition value paid by the Plaintiff as a consideration for the acquisition of the instant stocks, and thus, it is reasonable to deem that the transfer loss did not occur.

(C) Even if the necessary expenses under Article 97 (1) 1 (b) of the former Income Tax Act are considered as necessary expenses.

Article 548 of the Civil Act, which provides for the duty of restitution as the effect of termination of a contract, provides for the duty of restitution in addition to interest from the date of receipt of the contract, is a special provision on unjust enrichment. Thus, the scope of return of the benefit is the whole of the benefit received unless there is good faith or bad faith (see, e.g., Supreme Court Decision 98Da43175, Dec. 23, 1998). Accordingly, even if the Plaintiff’s expense to be borne due to the seller’s duty of restitution is included in the expenses, considering the following circumstances, it is difficult to deem that the loss from transfer occurred. (i) If the contract is lawfully rescinded, each party to the contract is obligated to return the object to the other party pursuant to Article 548 of the Civil Act, and the money to be returned to the buyer as the result of the cancellation of the contract, and barring special circumstances, the buyer is obliged to return the object to the buyer at the time of selling the object to the third party before the seller’s termination of the contract.

② According to the above legal doctrine, where the Plaintiff, whose ownership of the instant shares was transferred from the Plaintiff, disposes of the instant shares to BSKH before the cancellation of the contract and thus becomes unable to return originals due to the cancellation of the contract, the Plaintiff shall return the value as the restoration duty, and the value of the subject matter to be returned at this time shall be deemed as the price at the time of disposal

③ However, according to Article 95 of the former Income Tax Act, the transfer income amount is calculated by deducting the acquisition value, which is necessary expenses, from the total income amount. The Plaintiff’s total income and necessary expenses are the same as the price for the Plaintiff’s disposal of the stocks in this case. Therefore, it is difficult to deem that the transfer loss

④ If so, even if the scope of acquisition value corresponding to necessary expenses is broad, it is difficult to deem that the transfer loss occurred.

(D) Therefore, the Plaintiff’s assertion on this part is without merit.

E. Sub-decision

Ultimately, it is difficult to deem that the Plaintiff incurred loss from the transfer of the instant shares to the SH. In a lawsuit seeking revocation of a tax disposition, the subject matter of the lawsuit is the objective existence of the tax base and tax amount recognized by the tax authority, and the Defendant’s disposition, which did not consider the transfer loss, is lawful within the scope of the reasonable tax amount.

3. Conclusion

Then, the claim of this case by the plaintiff is dismissed due to the lack of reason, and the judgment of the court of first instance is so dismissed.

As above, the appeal by the plaintiff is just and without merit. It is so decided as per Disposition by the assent of all participating Justices.

Relevant Acts and subordinate statutes>

A. The former Income Tax Act (amended by Act No. 7120 of Jan. 29, 2004)

Article 88 (Definition of Transfer)

(1) The term "transfer11" in Article 4 (1) 3 and this Chapter means that any assets are actually transferred for price due to sale, exchange, investment in kind in a corporation, etc., regardless of any registration or enrollment concerning such assets. In such cases, where a donee takes over any obligation of a donor of an onerous donation (excluding cases falling under the main sentence of Article 47 (3) of the Inheritance Tax and Gift Tax Act), the portion equivalent to the amount of such obligation in the donation amount shall

Article 92 (Calculation of Tax Base of Transfer Income)

(2) The transfer income tax base shall be the amount obtained by making the basic deduction of transfer income as prescribed in Article 103 from the transfer income amount calculated under Articles 94 through 102 and 118.

Article 94 (Scope of Transfer Income)

(1) Transfer income shall be the following incomes generated in the relevant year:

3. Income accruing from transfer of stocks or investment shares falling under any of the following items (including preemptive rights; hereafter in this Chapter, the same shall apply):

(a) Transfer of stocks, etc. of stock listed corporations under the Securities and Exchange Act (hereinafter referred to as “1-listed corporation”) by major stockholders as prescribed by the Presidential Decree in consideration of the ratio of stocks owned, total market value, etc. (hereinafter in this Chapter referred to as “major stockholders”) and transfer of stocks, etc. not by transaction in the securities market under the same Act

(b) Stocks, etc. of an Association-registered corporation under the Securities and Exchange Act (hereinafter referred to as “Association-registered corporation”) which are transferred by major stockholders of the concerned corporation not through transactions in an Association brokerage market under the same Act (hereinafter referred to as “Association-registered

(c) Stocks of corporations other than stock-listed corporations or Association-registered corporations.

Article 95 (Transfer Income Amount)

(1) The amount of capital gains shall be the amount calculated by deducting the amount of special deduction for long-term holding from the amount (hereinafter referred to as "gains from the transfer") obtained by deducting necessary expenses pursuant to Article 97 from the total amount of capital gains pursuant to Article 194 (hereinafter referred to as "transfer value").

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(1) In calculating gains on transfer of a resident, necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets prescribed in Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: Provided, That in case where the assets concerned fall under any of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

(b) In case of assets falling under Article 94 (1) 3 and 4, the actual transaction price required for the acquisition of the relevant assets;

(c) In case of the proviso of item (a) or (b), if it is impossible to confirm the actual transaction price at the time of acquisition, it shall be determined by the Presidential Decree.

2. Capital expenses, etc. prescribed by Presidential Decree;

3. Deleted;

4. Transfer expenses, etc. as prescribed by the Presidential Decree.