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The judgment below
The part against the plaintiff is reversed, and that part of the case is remanded to Busan High Court.
The defendant.
Reasons
The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).
1. As to the Defendant’s ground of appeal
A. Article 52(1) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same) provides that “where a domestic corporation deems that its tax burden on its income has been unjustly reduced due to transactions with a person with a special relationship, the tax authority may calculate the amount of income for each business year of the corporation regardless of the act or calculation of the amount of income of the corporation (hereinafter “Calculation by wrongful act”),” and Article 88(1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19328, Feb. 9, 2006; hereinafter the same) upon delegation from Article 8(4) of the same Act provides that “where the domestic corporation purchases assets at a price higher than the market price” under subparagraph 1, and subparagraph 9 of the same Article provides that “other acts or calculations corresponding to subparagraphs 1 through 8 and other profits of the corporation are distributed.”
B. In full view of the contents and purport of Articles 15, 17, 19, and 20 of the former Corporate Tax Act, which provide that the increase or decrease in net assets due to capital transactions shall not be included in gross income or deductible expenses, even if a shareholder corporation acquired new stocks issued by another corporation which is a person with a special relationship at a price higher than the market price, it shall not be deemed as a "purchase of assets at a price higher than the market price" or "cases equivalent thereto", and thus, it shall not be deemed as a wrongful calculation by applying Article 88 (1) 1 or 9 of the former Enforcement Decree of Corporate Tax Act.
(see, e.g., Supreme Court Decision 2012Du23488, Jun. 26, 2014). Accordingly, the Plaintiff is deemed a “B” corporation (hereinafter “B”).