Where a contract is concluded for transferring stocks in the capacity of a purchaser of stocks, the value of the stocks initially sold shall be the acquisition value.

When a stock buyer has delegated the authority to sell and purchase the shares to the seller, and again transfers the shares in the capacity of an agent of the stock buyer, the value of the shares originally transferred shall be the acquisition value.

Article 97 (Calculation of Necessary Expenses for Transfer Income)

Suwon District Court 2016Guhap61656 Revocation of Disposition of Imposing Capital Gains Tax

AA

00. Head of tax office

on October 07, 2017

on October 14, 2017

1. The Defendant’s imposition of capital gains tax of KRW 91,464,910, which was rendered by the Plaintiff as of May 8, 2015, exceeds KRW 8,081,556, and the imposition of KRW 13,302,810, which was made as of May 12, 2015, exceeds KRW 13,221,197, respectively, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 91,464,910 as of May 8, 2015 against the Plaintiff and the imposition of KRW 13,302,810 as of May 12, 2015, respectively, shall be revoked.

1. Details of the disposition;

1. Details of the disposition;

A. D&D Industry Development Co., Ltd. (the trade name on August 14, 2012 changed to a “000 environment for a stock company.” hereinafter referred to as “00 environment”) is a domestic waste disposal company, and the SSS and JJ owned 50% of its issued shares by using the name of the principal and branch.

B. On April 2, 2012, the Plaintiff agreed to purchase 46,760 shares equivalent to 33.3% of the shares of 00 environment to participate in the domestic waste disposal business, and agreed to the following contents with the SS, SS, and JJ (hereinafter “Agreement on April 2, 2012”), paid KRW 1.5 billion to the SS and JJ, and thereafter paid KRW 30 million to the SS and JJ as the purchase price of shares.

C. The Plaintiff, SS and JJ established 00,000 won out of the above KRW 1.5 billion as a stock price, and established 00,000,000,000 for waste transportation business company (hereinafter referred to as “W”), and used 534,000,000 won and the remainder 266,000,000 won as the operation fund for www.

D. On December 10, 2012, the Plaintiff and SS were the seller, and the BB was the buyer, and the agreement on the stock trade with the content that the Plaintiff shall transfer the management right and all outstanding shares of 00 billion won to 3.88 billion won. As a result, the Plaintiff was paid KRW 1.07 billion to K, and KRW 560 million to K, respectively.

E. From August 7, 2014 to December 20, 2014, the Central Regional Tax Office: (a) conducted an investigation of stock change with the Plaintiff, etc., and determined that the Plaintiff did not report the transfer of 00 environmental shares to BB on December 10, 2012; and (b) notified the Defendant of the taxation data to impose capital gains tax, etc. on the aggregate of the acquisition value of 00 environmental shares of KRW 1 billion and KRW 70 million received by the Plaintiff, and KRW 50 million received by KK, KRW 1.6 billion,000,000,000 received by the Plaintiff.

F. As of May 8, 2015, the Defendant imposed respectively KRW 91,464,910 of the transfer income tax for the year 2012 on the Plaintiff, and KRW 13,302,810 of the securities transaction tax as of May 12, 2015 (hereinafter “each disposition of this case”).

G. On June 11, 2015, the Plaintiff filed a petition with the Tax Tribunal for a trial seeking revocation of each of the instant dispositions, but the Tax Tribunal dismissed all the Plaintiff’s claims on November 27, 2015.

[Reasons for Recognition] Facts without dispute, Gap's 1 through 7, 17, 21 evidence, Eul's 1 and 2 evidence (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The parties' assertion

1) The plaintiff's assertion

The Plaintiff, upon agreement on April 2, 2012, acquired 00 as well as 00 environmental shares collectively, and concluded a settlement agreement related thereto with YY, SS, and JJ, and concluded a share sales contract with BB upon delegation of authority from YY as a result of disputes arising between the parties concerned. Therefore, the transferred assets subject to capital gains tax and securities transaction tax shall be 00 environment and www shares, and the acquisition value shall be 1.5 billion won paid by the Plaintiff under the agreement on April 2, 2012, and 50 million won paid by Y from YB and 1.6 billion won received by YB, including 1.6 billion won received by YB and 1.6 billion won received by YB and 1.6 billion won received by YB should be determined as the acquisition value of each of the instant shares should be revoked and disposed of by mistake.

2) The defendant's assertion

The sales contract that was concluded between the Plaintiff and the YY between the Plaintiff and the YY was terminated. The Plaintiff entered into a separate contract with the BB and transferred only 00 billion environmental shares, and the Plaintiff received 1.07 billion won from the BB, and the Plaintiff received YY’s purchase price from the BB in lieu of returning the purchase price to the YY. Accordingly, the Plaintiff received 560 million won from the BB in lieu of cancelling the sales contract with the YY. Accordingly, the assets transferred by the Plaintiff are limited to 00 environmental shares, the acquisition price is KRW 1.0 billion, and the transfer price is KRW 70 million,000,000,000,000 and KRW 560,000,000,000 received by the Plaintiff, and each disposition of this case is lawful.

B. Determination

1) The following facts may be acknowledged either as a dispute between the parties, or as a result of Gap evidence Nos. 4 through 19, 20, and 24, as a witness YY, and as a result, by adding each testimony of gender agents to the whole purport of the pleadings.

A) On April 2, 2012, the Plaintiff acquired 46,760 shares of 00 SS and JJ issued 140,000 shares of 140,000 shares, and established www and acquired 46,760 shares of 140,00 shares of issued shares.

B) On August 10, 2012, the Plaintiff entered into a share purchase contract with the Plaintiff to sell 00 environmental YY and 46,760 billion won total of 46,760 million won shares of www, respectively. On the same day, the Plaintiff and YY, SS, and JJ shall transfer 00 environmental and YY’s shares held by the Plaintiff to the YY. On the other hand, 33% of YY’s shares of www shall be transferred to the JJ, and 00 environment shall be shared by exchanging Y, SS, J, and Y with 00s shares of Y in exchange for 00s and Y’s shares (hereinafter collectively referred to as “the above share purchase contract and settlement contract”).

C)Y LY borrowed KRW 50 million from KK and paid KRW 550 million to the Plaintiff as down payment and intermediate payment. On August 23, 2012, Y made and completed a notarial deed on money consumption loan agreement in the Plaintiff’s future on August 23, 2012, Y acquired 46,760 shares held by the Plaintiff out of the shares issued in the 00 environment. Of these, 38,90 shares, YY signed a transfer in the name of YY in the name of YY, and the remainder 7,70 shares.

D) In addition, according to the agreement on August 10, 2012, the JJ transferred 46,620 shares of the 00 environmental shares, which were held by it, to the SS, and the SS transferred the shares of the www to the Plaintiff and the JJ. Accordingly, the shares issued in the 00 environment were held by YY 46,760 shares (7,770 shares in the name of KK), SS holds 93,240 shares, and the shares issued in www hold 50 percent each by the Plaintiff and the JJ.

E) However, upon the occurrence of a dispute between the parties to the YY’s participation in the management on August 10, 2012, the parties to the Y transferred 00 environmental outstanding shares in the YY to KR. The Plaintiff, SSS, JJ, and KR decided to recover their respective investment in a way that sells 00 environment to a third party, while the purchaser was colored, the Plaintiff sold BB on December 10, 2012 the entire management and outstanding shares in the 00 environment to 3.8 billion won.

F) According to the above sales contract, the Plaintiff received KRW 1,00,000 from BB, and KK received KRW 560,000,000 from 560,000,000. The amount of KRW 560,000,000 paid by KK to YY was calculated by adding KRW 5,50,000,000,000, which was paid to the Plaintiff as the purchase price of shares in the 00 environment, as interest.

G) Since then 00 environmental issued shares were transferred to BB and its branch in the future, and shares issued in the name of the plaintiff from among the issued shares of the www are transferred to JJ before the JJ, and the JJ holds 100% of the issued shares of the www and independently operates www.

2) In full view of the following circumstances revealed through the above facts, the Plaintiff transferred YY’s shares to YY as well as 00 environmental shares owned by the Plaintiff on August 10, 2012. As Y paid only KRW 550 million out of the transfer price agreed YY, the Plaintiff sold 00 environmental shares to BB in order to settle the accounts with Y unpaid and conclude a settlement contract on August 10, 2012 under the premise that Y maintains the agreement between the parties to the agreement on August 10, 2012. The Plaintiff received KRW 1 billion from BB, and completed the settlement of the purchase price pursuant to the agreement on August 10, 2012. Accordingly, it is reasonable to deem that the Plaintiff completed the settlement of the purchase price on August 10, 2012, under the premise that Y is paid KRW 00,000,000 and KRW 705,000,000,000 from each purchase price.

① The agreement of August 10, 2012 contains the content that the JJ independently holds the issued shares of the www and that the S and YY separately operate each company while holding more than half of the issued shares of the 00 environment. As alleged by the Defendant, the Plaintiff and YY entered into a share sales contract with the YY on August 10, 2012. If the Plaintiff and YY entered into a new sales contract with BB on the subject of transfer only of the 00 environment, the Plaintiff must hold shares of the www excluded from the subject of transfer. However, since the agreement of August 10, 2012, the J independently operated the www, and the Plaintiff does not seem to have exercised its authority as a shareholder.

② The sales contract entered into between BB and the Plaintiff and SS entered into as the object of transfer only of the 00 environmental shares as the transferor, and the above sales contract entered into as the object of transfer all claims and obligations between www and the 00 environment, and it appears that 00 environment and www are completely separated from the management of the company and the 00 shareholder.

③ Around August 10, 2012 agreement, 50% of the issued shares of www was transferred to the Plaintiff’s future, but it appears that YY merely appears to be due to the fact that YY was before the Plaintiff fully pays the purchase price pursuant to the above agreement, and the Plaintiff transferred the name of the said shares to JJ without receiving any particular consideration following the completion of the transfer procedure for the environment of 00.

④ On November 26, 2012, the Plaintiff and YY will cancel the contract signed between the Plaintiff and YY on August 10, 2012, and the Plaintiff will compensate for the investments and losses of YK and Y. However, this is not for the Plaintiff and YY, SS, and JJ’s conclusion that the entire agreement was concluded on August 10, 2012, which was concluded between YY, and YY will not be for final cancellation, but for the purpose of seeking resolution on the part of 50 million won, which was paid to the Plaintiff in accordance with the above agreement. On December 10, 2012, Y concluded with BB a sales contract signed with the Plaintiff on December 10, 2012, YY did not pay all remaining shares to the Plaintiff, including the Plaintiff’s written confirmation of the purchase and sale of shares, but did not pay all remaining shares to the Plaintiff.

⑤ From the fact that YY did not participate in the sales contract with YB, it appears that Y was due to the fact that Y transferred 00 environmental shares to KR and actually exercised its authority for 00 environment operation and sale. Moreover, YY’s drafting and granting the Plaintiff a written confirmation as of December 10, 2012, YY’s drafting and granting the Plaintiff a written confirmation as of December 10, 2012 should be deemed as a premise that the Plaintiff would no longer claim for the purchase price of shares under the agreement as of August 10, 2012 by selling Y’s shares on behalf of Y and receiving the purchase price. Accordingly, YY did not suffer a significant disadvantage if Y is resolved only by 50 million won borrowed from KR through a transfer of shares in the active environment.

Therefore, it can be seen that there is no need to participate in the sales contract with BB.

(6) In light of the above circumstances, YY delegated the Plaintiff with the authority to sell and purchase environmental shares, and the Plaintiff ought to be deemed to have entered into a contract with BB as an agent for YY to transfer 00 environmental shares. Moreover, upon receiving KRW 1 billion from BB, the Plaintiff’s receipt of KRW 70 million from BB, and upon receiving KRW 1 billion from BB, the payment of KRW 560 million for the Plaintiff’s purchase price for the Plaintiff ought to be completed. Meanwhile, it is reasonable to deem that YY received KRW 560 million from BB was not for the Plaintiff’s return to YY, but for the Plaintiff’s receipt of KRW 50 million from BB as the purchase price for shares received from YB, and that it was a simple process to repay the loan amount of KRW 550 million and interest thereon.

Therefore, the acquisition value, which serves as the basis for calculating the tax base of each of the dispositions of this case, is KRW 1.56 billion paid by the Plaintiff under an agreement on April 2, 2012, and the transfer value is KRW 550 million received by the Plaintiff from YB, including KRW 1.62 billion received by the Plaintiff from YB, and KRW 1.7 billion received by the Plaintiff from YB.

3) Meanwhile, even where the taxation authority is deemed to be unlawful in the process of calculating the amount of tax in a lawsuit seeking revocation of a taxation, when the amount of tax to be lawfully imposed based on the data submitted until the conclusion of the pleadings at the fact-finding court is calculated, the court shall not revoke the entire amount of the taxation, but shall regard only the portion exceeding the reasonable amount of tax assessed as unlawful and revoke only such unlawful portion (see, e.g., Supreme Court Decision 97Nu19496, Sept. 29, 20

Based on the above-mentioned acquisition value of KRW 1.56 billion and transfer value of KRW 1.66 billion, 1.62 billion, the amount of legitimate capital gains tax and securities transaction tax calculated against the Plaintiff is KRW 8,081,556, and securities transaction tax 13,221,197 as stated in the attached Form, as stated in the “justifiable Tax Amount.” As such, the exceeding part of each of the dispositions of this case is unlawful.

3. Conclusion

If so, the plaintiff's claim is justified within the scope of the above recognition, and the remaining claims are accepted.

It is dismissed as it is without merit. It is so decided as per Disposition.