[Judgment of the court below]

Head of Central Tax Office

July 21, 201

1. The plaintiff's claim is dismissed.

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

The disposition of imposition of global income tax of KRW 308,525,430 against the Plaintiff on May 17, 2010 shall be revoked.

1. Details of the disposition;

A. On May 30, 2003, the Plaintiff, Nonparty 1, Nonparty 2, Nonparty 3, and Nonparty 4-5 (hereinafter “Dong”) entered into a partnership agreement with the following content.

In the public sale procedure of Korea Asset Management Corporation, ○○○ Sports Center buildings (the nineth floor above the ground and the fourth floor below the ground) located in the Gu shall be awarded a successful bid and run a business related to real estate, such as sale, sale, lease, etc., as a partnership business.

○ The number of shares in the Dong business shall be 3/12 each, 3/12, and 2/12 each.

The registration of ○○ Business Property shall be made under a joint name.

○ Costs incurred in the project shall be borne in proportion to each share.

B. In accordance with the above business agreement on June 2, 2003, partners acquired the above building price of 21,407,000,000 won in the public sale procedure of Korea Asset Management Corporation and engaged in the business of selling it in general.

C. On February 5, 2004, the Plaintiff decided to withdraw from the above partnership relationship, and entered into a contract for termination of the partnership with the Plaintiff on February 5, 2004 (the withdrawal of Nonparty 2 among the above partners, and the addition of Nonparty 5) as follows.

○○○○○ Sports Center’s withdrawal from the business relationship, and the Plaintiff’s share in the second floor (except for 204) and the site corresponding thereto is solely owned by the Plaintiff. The Plaintiff’s share in the remainder of the building and the site corresponding thereto (except for the share of sale in lots) is transferred at the ratio of Nonparty 1, Nonparty 3, Nonparty 4, and Nonparty 5, respectively, 3/9, 2/9, 2/9, 2/9, 2/9, and 9 (hereinafter “instant real estate”). The Plaintiff’s share in the remaining part of the building and the site corresponding thereto is transferred to the Plaintiff’s sole ownership (hereinafter “instant real estate”).

D. On February 5, 2004, the Plaintiff completed the registration of ownership transfer under the Plaintiff’s sole name, which was based on the division of common property concerning the instant real estate in accordance with the contract for the termination of the said business.

E. On April 1, 2006, the Defendant: (a) considered KRW 2,289,184,00, which was the aggregate of the expected sales prices of the instant real estate acquired by the Plaintiff in the course of withdrawal from the partnership with the Plaintiff as the business income accrued to the Plaintiff (real estate sale) and rendered a disposition to rectify and impose global income tax of KRW 1,062,245,110 for the portion of April 1, 2004 (hereinafter “the previous disposition”).

F. The plaintiff is dissatisfied with the previous disposition and filed an administrative litigation with the Suwon District Court (2006Guhap7899). On June 27, 2007, the court rendered a favorable judgment of the plaintiff for the following reasons, and the above judgment became final and conclusive.

○○ Acquisition of the instant real estate shall be deemed to have been acquired in the sense that the Plaintiff’s share in the same kind of business was returned at the time of withdrawal from the partnership relationship. As such, in substance, the Plaintiff’s purchase of the instant real estate is deemed to have been carried out as shares in the same partnership. In such a case, in light of Article 14(2) of the Framework Act on National Taxes, only the amount exceeding the amount of money and other property acquired by the Plaintiff at the time of withdrawal from the partnership relationship shall be subject to taxation, and the income subject to taxation as above falls under the “income having the nature of profit distribution” under Article 17(1)7 of the former Income Tax Act as income similar to the income under subparagraphs 1 through 6 of the same Article, and thus, the Defendant shall calculate the value of the property acquired at the time of withdrawal from the partnership, such as the instant real estate, and impose the difference as dividend income on the difference. Thus, the previous disposition in view that the income acquired by the Plaintiff is the business income, and thus, is unlawful.

G. Accordingly, the Defendant revoked the previous disposition of this case on August 31, 2007 according to the above judgment, and deemed that the Plaintiff earned dividend income, the Defendant deemed that the Plaintiff was entitled to imposition of KRW 5,351,750,00,000, which is the aggregate of the expected sales prices of the real estate of this case, was reverted to the Plaintiff as dividend income, and imposed a disposition of KRW 513,650,000, which is the global income tax of KRW 308,525,430 (hereinafter “instant disposition”) on May 17, 2010 on the Plaintiff.

H. On June 24, 2010, the Plaintiff appealed to the National Tax Tribunal, but was dismissed on December 27, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 5, Gap evidence 6-1, 2, Eul evidence 2, the purport of the whole pleadings

2. Determination on the legality of the disposition

A. The plaintiff's assertion

The dividend income under relevant laws and regulations is evident that profits, surplus funds, or deemed dividend, etc. distributed from a corporation to shareholders, employees, or other investors. The instant disposition, based on the premise that the Plaintiff obtained dividend income on the instant real estate, which was merely a change in the form of partition of co-owned property by sole ownership, when the Plaintiff withdraws from a joint venture which is not a corporation.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

살피건대, 공동사업으로 인한 소득은 그 각 지분 또는 손익분배비율에 의하여 분배되거나 분배될 금액에 따라 각 소득금액을 계산하여야 하고, 동업관계에서 탈퇴할 때 수령한 금전 기타 재산의 가액 중 출자금을 초과하는 부분은 과세대상 소득이 된다고 할 것이다( 대법원 1995. 11. 10. 선고 94누8884 판결 참조).

Article 14(2) of the Framework Act on National Taxes provides that the provisions on the calculation of tax base in tax-related Acts shall apply in accordance with the substance, notwithstanding the name or form of income, profit, property, act or transaction. Article 17(1)7 of the former Income Tax Act (amended by Act No. 7319, Dec. 31, 2004; hereinafter the same shall apply) provides that “the income which is similar to those in subparagraphs 1 through 6 is of the nature of profit distribution” and “the constructive dividend” under subparagraph 3 of Article 14(2)1 of the former Income Tax Act as dividend income. Meanwhile, Article 14(2)1 of the same Act provides that “The amount of money acquired by an employee or investor from the corporation due to retirement, withdrawal, or reduction of investment exceeds the amount required for the acquisition of the relevant investment, and thus, it is reasonable to consider the amount exceeding the amount required by the employee or investor to obtain the income tax from the corporation under the premise that it is in excess of the amount required for the income and its actual profit distribution, regardless of the purpose of taxation.”

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment Omission of Related Acts]

Judge Lee Han-hoon (Presiding Judge)