Cho High Court Decision 2010Du3543 ( October 27, 2011)

Since new shares are acquired, taxation of gift tax on the premise of forfeited shares is illegal.

It is reasonable to deem that the agreement submitted, sales contract, confirmation document, etc. was prepared in order to avoid the burden of additional tax pursuant to the delayed report of capital gains tax. Thus, the defendant cannot reverse the plaintiff's acquisition of stocks, and the plaintiff acquires new stocks distributed to himself/herself, not to acquire forfeited stocks. Thus, the disposition of this case based on the assumption of forfeited

2011Revocation of revocation of disposition imposing gift tax, etc.

Maximum XX

Head of the District Tax Office

March 28, 2012

April 20, 2012

1. The Defendant’s disposition imposing gift tax of KRW 000 on the Plaintiff on June 14, 2010 shall be revoked.

2. The litigation costs shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. P Co., Ltd. (hereinafter referred to as “Nonindicted Co., Ltd.”) set the issue price of 200,000 common shares on December 27, 2006 at KRW 000 per share (hereinafter referred to as “the instant capital increase”). The Plaintiff subscribed all new shares on the same day.

B. On June 14, 2010, the Defendant: (a) assessed the value per share of the non-party company prior to the instant capital increase as a supplementary assessment method; and (b) decided and notified KRW 000 of the gift tax for the year 2006, on the ground that the Plaintiff received the forfeited share of ED and ECC, a shareholder of the non-party company; and (c) determined and notified the Plaintiff of the amount of the original amount of the gift tax to be reduced to KRW 000 on the ground that the calculation of the calculated tax, the additional tax on negligent returns, and the calculation errors in the calculation of the amount of wrong payment.

C. Accordingly, the Plaintiff filed an appeal with the Tax Tribunal on August 3, 2010. On July 27, 2011, the Tax Tribunal rendered a decision of correction on the tax base and amount of tax on the ground that “the shareholders of the non-party company are Plaintiffs, KimA, LeeB, and Jung-CC, and DoD sells the shares held before the instant capital increase, and there is no gift benefit from the acceptance of forfeited stocks of DoD. The value per share of the non-party company prior to the instant capital increase should be assessed not as a supplementary assessment method but as a transaction example.”

D. On August 10, 201, the Defendant made a correction and notification of reduction of gift tax of KRW 000 (hereinafter “instant disposition”) to the Plaintiff on August 10, 201.

[Reasons for Recognition] The Evidence Nos. 1, 21, 22, 23, 28, and Eul No. 1-1, 2, 3, and 2

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Due to the Plaintiff’s transfer of shares to the Plaintiff prior to the instant capital increase, the instant disposition that imposed gift tax following the acquisition of forfeited shares by JeongCC was unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) On December 31, 2006, the Defendant: (a) stated 27,50 shares of CC as stated in the statement of changes in shares; (b) stated the Plaintiff’s share ratio in the financial statements of the external audit report in the business year 2006; (c) made and delivered a written agreement on September 3, 2007 that “the purchase of shares must be invalidated”; (d) prepared a sales contract with CC on October 22, 2007; (e) wired CC KRW 000 on April 18, 2008 and KRW 000 on April 21, 2008; (e) stated that “CC did not transfer the shares of this case to the Plaintiff’s rejection in the course of the tax investigation; and (e) transferred the forfeited shares to Nonparty 3,008 on April 208, 208; and (e) stated that “CC prepared a certificate of forfeiture on April 208, 2008.”

(2) However, with respect to ① statement of stock change; ② Article 119 of the Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007) and Article 161(5) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 20619 of Feb. 22, 2008) require shareholders to submit a statement of stock change to the corporation where such change is made due to sale and purchase, capital increase, capital increase, inheritance, donation, and investment during the pertinent business year; ② shareholders' share ratio, total face value, and total amount of holding investment are changed; it is necessary to calculate the acquisition price at the time of transfer of the shares; ② shareholders' change needs to be held by the tax authority as taxation data such as global income tax on dividend income; ③ It is reasonable to consider the fact that the shareholders' shareholder's change was only for preventing the loss of taxation claims by using the collected shareholders' change in the shareholders' list and for ensuring equity in taxation, and the shareholders' shareholder' list were 1000 weeks and 200.

(2) On the other hand, the Plaintiff shall be deemed to have been paid 0.0 of the purchase price of the 20-party 10-party 2 with the 0-party 20-party 10-party 10-party 2-party 2-party 3-party 2-party 1-party 2-party 2-party 3-party 1-party 7-party 2-party 1-party 2-party 1-party 7-party 1-party 3-party 7-party 1-party 8-party 1-party 2-party 1-party 2-party 1-party 1-party 7-party 1-party 2-party 1-party 3-party 3-party 1-party 1-party 3-party 1-party 3-party 1-party 1-party 1-party 1-party 30-party 1-party 1-party 30-party 30-party 2.

3. Conclusion

As such, the Plaintiff did not accept forfeited stocks of JeongCC, but accepted new stocks distributed to it, the instant disposition based on the premise of accepting forfeited stocks of JungCC was unlawful, and the Plaintiff’s claim is reasonable, and thus, it is so decided as per Disposition.