주식회사 팬텀엔터테인먼트그룹 (소송대리인 법무법인 랜드마크 담당변호사 김재훈)

The Director of Gangnam District Office

May 27, 2011

Seoul Administrative Court Decision 2009Guhap11201 Decided May 14, 2010

1.The judgment of the first instance shall be modified as follows:

A. The Defendant’s disposition of imposing corporate tax of KRW 2,286,401,410 for the Plaintiff on February 21, 2007 exceeds KRW 1,66,54,556 among the disposition of imposing corporate tax of KRW 2,286,40 for the Plaintiff shall be revoked.

B. The plaintiff's remaining claims are dismissed.

2. Of the total litigation costs, 50% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

1. Purport of claim

The Defendant’s disposition of imposition of corporate tax of KRW 2,286,401,410 for the year 2005 against the Plaintiff on February 21, 2007 (referred to as “the date of February 15, 2007,” which appears to be written in the written complaint, is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of the disposition;

The reasoning for this part is that the court shall be stated in this part of the reasoning for the judgment of the court of first instance, with the exception that the term "stock company of a second company" in the second part of the judgment of the court of first instance is attached to "stock company of a second company" as "stock company of a second company", and that the term " February 15, 2007" in the third part of the judgment of the court of first instance shall be read as " February 21, 2007" and the term "2,286,401,40 won" in the second part of the judgment of the court of first instance as "tax 2,286,401,410 won" in the second part of the judgment of the court of first instance as "corporate tax 2,286,401,410 won" and it shall be cited as it is in accordance with Article 8 (2) of the

2. Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the disposition is lawful;

A. The parties' assertion

(1) The plaintiff's assertion

At the time of entering into a contract for a comprehensive exchange of the Plaintiff’s shares and the instant combined shares, the Plaintiff calculated the arithmetic average of the values of the instant combined shares by requesting the accounting firm to calculate the value of the assets and earnings by calculating the arithmetic average of the values of the assets and earnings values of the instant combined shares in accordance with related Acts and subordinate statutes, such as the Securities and Exchange Act, and calculated the average closing price for the latest one week, the average closing price for the latest one week, and the recent closing price, and then determined the exchange rate according to each amount, and reported and publicly announced the exchange rate to the Financial Supervisory Commission in accordance with related Acts and subordinate statutes, such as the Securities and Exchange Act and other relevant Acts and subordinate statutes. Since the value of the instant combined shares stipulated in the said exchange contract is fairly calculated in accordance with the Securities and Exchange Act and other relevant Acts and subordinate statutes, it shall be deemed the acquisition value of the instant combined shares, and on this basis, the corporate tax attributable to the year

(2) The defendant's assertion

According to Article 43 (Application of Corporate Accounting Standards and Practices) of the Corporate Tax Act and subparagraph 5 (19) of the corporate accounting standards, the acquisition value of the instant shares shall be calculated by considering the exchange ratio of the instant shares and the Plaintiff’s shares based on the closing price as of the date of the contract for exchange of the Plaintiff’s shares subject to exchange of the instant shares, namely, KRW 5,700 per share, so the instant disposition is lawful.

B. Determination

(1) Article 80 of the former Corporate Tax Act (amended by Act No. 8141 of Dec. 30, 2006; hereinafter the same shall apply) provides that, where a domestic corporation is dissolved due to a merger, the liquidation income (hereinafter referred to as "settlement income due to a merger") shall be the total amount of the cost of merger that stockholders, etc. of a merged corporation receive from the merged corporation minus the total amount of equity capital as of the date of the date of the registration of the merger of the merged corporation (Paragraph (1) and Paragraph (1) of the same Article shall be calculated in calculating the total cost of merger under Article 80 of the former Corporate Tax Act, where the merged corporation acquires stocks, etc. of the extinguished corporation (in case of new establishment or merger by 3 or more corporations, including the stocks, etc. of another extinguished corporation acquired by the merged corporation; hereafter referred to as "combined stocks, etc." in this Article) within 2 years prior to the date of the registration of the merger, the total cost of the merger shall be calculated by adding the acquisition value of the relevant combined stocks, etc.

(2) Whether the closing price on the date of the exchange contract for the Plaintiff’s shares subject to the exchange of the instant shares can be seen as the “market price at the time of acquisition” of the instant shares

Article 43 of the former Corporate Tax Act provides that, in calculating the income amount of a domestic corporation for each business year, where the relevant corporation applies corporate accounting standards generally recognized as fair and reasonable with respect to the business year of accrual of earnings and losses and the acquisition and evaluation of assets and liabilities, or continuously applies practices, the relevant corporate accounting standards or practices shall be followed except as otherwise provided for in this Act and the Restriction of Special Taxation Act. Article 5(19) and (20) of the corporate accounting standards provide that, where a tangible asset is acquired through the exchange of different types of assets, the acquisition cost of the tangible asset shall be the fair value of the assets provided for the exchange and the fair market value of the tangible asset shall be the fair market value. However, in addition, Article 43 of the former Corporate Tax Act and the above corporate accounting standards cannot be seen as a different type of asset, and it cannot be seen as the legal basis for calculating the market value of the Plaintiff at the time of the exchange of the above stocks (Article 43 of the former Corporate Tax Act and the above corporate accounting standards at the time of the exchange of stocks).

(3) The actual transaction price of the combined stocks of this case

(A) Facts of recognition

1) At the time of the conclusion of the above exchange contract, the Plaintiff was assessed by a new accounting corporation, an outside director, and reported to the Financial Supervisory Commission and the Korea Stock Exchange on the matters of merger management, and announced it to the public pursuant to Article 190-2 of the former Securities and Exchange Act, Article 84-7 (1) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20551 of Feb. 29, 2008), Article 36-12 (3) of the former Enforcement Rule of the Securities and Exchange Act (amended by Presidential Decree No. 875 of Mar. 3, 2008).

2) Of the above details of a stock exchange (72.41219:1 and 2 company's shares for 1 company) as mentioned above are as follows. In other words, the Plaintiff calculated the value per share of 1 company by taking account of the above-mentioned Securities and Exchange Act, Enforcement Decree, Enforcement Rule, and Enforcement Rule of the same Act, and Articles 82 and 5 through 8 of the Regulations on Issuance and Public Disclosure of Securities and Exchange, the average value of the value of assets and profits of 1 company should be calculated by taking account of the average value of assets and profits of 157,959 per share; 683,284 won per share; 2 company's shares for 19,064 won per share; 58,354 won per share; 200 won per share; 350 won per share; 1,254 won per share; 30% of the average value of the company's shares and profits per share because there is no similar company.

3) The Plaintiff and the Company 1 and 2 concluded the exchange contract as seen earlier after calculating the share swap ratio based on the aforementioned evaluation.

[Reasons for Recognition] Evidence Nos. 4, Evidence Nos. 7 through 9, the purport of the whole pleadings

(B) Determination

According to the above facts, since the Plaintiff and the first and second companies calculated a share swap ratio by evaluating the stock value per share of the Plaintiff as above in the above exchange contract, the actual transaction value of the shares of this case under the above exchange contract is 6,017,180,000 (=31,208 + 10,200 + 27,051 + 10,000).

(4) Whether the wrongful calculation was denied

Even if there is an actual transaction price of the combined stocks in the above exchange contract, the defendant can impose tax through the denial of wrongful calculation. Therefore, this paper examines this issue.

Article 52(1) of the former Corporate Tax Act provides that "where it is deemed that the calculation of a domestic corporation's act or income amount has unjustly reduced the tax burden on the corporation's income due to a transaction with a person with a special relationship prescribed by Presidential Decree, the income amount of the corporation for each business year may be calculated regardless of the calculation of the corporation's act or income amount (hereinafter "Calculation by wrongful act"). Accordingly, Article 88(1) of the former Enforcement Decree of Corporate Tax Act lists the types of "where it is deemed that the tax burden has been unjustly reduced" under each subparagraph. Meanwhile, Article 52(2) of the former Corporate Tax Act lists the types of "where it is deemed that the tax burden has been unjustly reduced," the calculation method shall be based on the price (including rate, interest rate, rent, exchange rate and other equivalent rate; hereinafter in this Article referred to as "market price") applied or deemed as applicable to a normal transaction between persons with a special relationship and the person with a special relationship, the appraisal method under Article 88(1) of the former Enforcement Decree of the Corporate Tax Act (excluding appraisal price).

In this case, even though the above exchange contract falls under the category of wrongful calculation set forth in the former Corporate Tax Act and the Enforcement Decree of the same Act, if there is a transaction example that adequately reflects the objective exchange value, it shall be deemed as the market price and its value shall be based on the amount calculated by the method of evaluation under Article 63 of the Inheritance and Gift Tax Act in the absence of such a transaction example. In the absence of such a transaction example, with respect to the shares of the company 1 and 2, the amount calculated by the method of evaluation under Article 63 of the Inheritance and Gift Tax Act shall be deemed as the market price.

However, even in cases of calculating the market price based on the method of appraisal under the Inheritance and Gift Tax Act, the denial of wrongful calculation is recognized as unjustly reducing the tax burden on the corporation's income. Thus, even if the corporate tax is improper, if the corporate tax is not excluded or reduced, or the corporate tax is increased, it does not constitute a wrongful calculation. However, the fact that the market price of the combined stocks of this case calculated based on the method of appraisal under Article 63 of the Inheritance and Gift Tax Act is less than the actual market price is less than 347,265, as there is no dispute between the parties, the fact that the market price per share of the first company calculated according to the method of appraisal under the Inheritance and Gift Tax Act is less than 16,804, and the defendant is less than 17,135, and the market price per share of the second company is 00,000,000 won x 70,000,000 won x 10,506,106,000.

(5) Calculation of a reasonable amount of tax

The “market price at the time of acquisition” of the shares of this case shall be KRW 6,017,180,000, which is the actual transaction price. If the corporate tax to be borne by the Plaintiff is calculated by adding the liquidation income to the liquidation income, it shall be KRW 1,66,54,556, such as the basis of taxation and the calculation details of the liquidation income for the business year of 2005, as stated in the attached Table 205 (

Therefore, the Defendant’s imposition of corporate tax of KRW 2,286,401,410 for the year 2005 against the Plaintiff on February 21, 2007 in excess of KRW 1,66,54,556 should be revoked as it is unlawful.

4. Conclusion

Therefore, the plaintiff's claim is justified within the above scope of recognition, and the remaining claims are dismissed as it is without merit, and the judgment of the court of first instance is unfair, so the judgment of the court of first instance is to be modified as above, and it is so decided as per Disposition.

[Attachment]

Judges Kim Chang-chul (Presiding Justice)