Seoul Administrative Court 2015Guhap79024 ( November 18, 2016)

2015west 2398 (2015.08)

After the gift tax was imposed on the stock market transfer transaction, if the economic benefits were fully returned according to the judgment that became null and void by filing a civil lawsuit, the initial taxation disposition is unlawful.

After the gift tax was imposed on the stock price transfer transaction between related parties, if the economic benefits were fully returned according to the judgment that became invalid in civil procedure, the tax disposition is illegal as it becomes the ground for later filing a claim for correction.

Article 35 of the Inheritance Tax and Gift Tax Act provides for a donation of profits from a transfer or transfer by transfer.

2016Nu7769 Revocation of Disposition of Imposing gift tax

EA and one other

O Head of the tax office and one other

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April 4, 2017

1. Revocation of a judgment of the first instance;

2. On March 3, 2015, the head of Defendant OO head of the tax office revoked the imposition of gift tax on March 20, 2012, respectively, of KRW 5,361,130 and KRW 7,148,170, which the head of Defendant △△△ Tax Office reported to Plaintiff B on March 5, 2015.

3. The total costs of the lawsuit shall be borne by the Defendants.

Cheong-gu Office

The same shall apply to the order.

1. Quotation of judgment of the first instance;

The reasoning for the judgment of the court in this case is as follows: (a) under the Commercial Act, "A copy of the disposition of this case concerning invalid transactions of the court of first instance" is as stated in the reasoning for the judgment of the court of first instance, except for the cases as set forth in paragraph (2) below; and (b) under Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act

2. Whether the disposition of this case is made against invalid transactions under the Commercial Act.

A. In light of the economic aspect of taxable income, it is sufficient to determine that taxable income has a taxable capacity to control and manage the profit in reality, and thus, it is not necessarily necessary to have a legal assessment of the causal relationship in which the income was derived (see, e.g., Supreme Court Decisions 91Nu5303, Dec. 10, 1991; 95Nu758, Nov. 10, 1995). However, if a contract which was the cause of income is legally null and void from the beginning of the private law, and if the economic profit was returned to all before the conclusion of the contract, it should be deemed unlawful.

B. The facts that the judgment in favor of the Plaintiff was issued on the grounds that the sales contract of each of the instant transactions was null and void in the relevant civil litigation, based on the above judgment, DD had a transfer of ownership to EE on October 10, 2016, EEE returned KRW 204,00,000 to DD and DD returned the said amount to KimCC on the same day. On October 10, 2016 and October 111, 2016, the KimCC returned each of the instant employees to the instant employees, KimCC and the instant employees returned each of the dividend payments to DD on October 12, 2016 and October 13, 2016, and DD returned them again.

According to the above facts, each of the instant transactions is legally null and void, and its economic benefits were fully returned (the Plaintiff’s exercise of rights as a shareholder prior to the return of the said economic benefits is merely a fact-finding act, and such exercise of rights in relation to DD should also be deemed null and void by law). However, even if the restoration of economic benefits was made after the instant disposition, the grounds for filing a subsequent claim for correction can also be asserted as an unlawful ground for imposition (see, e.g., Supreme Court Decisions 2001Du5989, Sept. 27, 2002; 2011Du1245, Dec. 26, 2013). The Plaintiffs’ assertion is unlawful since the instant disposition was against the transaction for which the income has not been realized.

3. Conclusion

Thus, the plaintiffs' claims are justified, and the judgment of the court of first instance is unfair with different conclusions, so the judgment of the court of first instance is revoked, and the plaintiffs' claims are accepted.