Whether the market price of the unlisted stock per stock donated by a corporation is high;

Considering the fact that the transaction price of the over-the-counter market at the time of donation of this case does not reach 700,000 won and many bond banks evaluated below 700,000 won, the tax authorities’ refusal to rectify the market price per stock of this case is illegal.

Article 45-2 (Request for Correction, etc.)

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The defendant's rejection disposition against the plaintiff on March 2, 2006 against the plaintiff on the tax base of 197,908,556,000 won and calculated tax amount of 53,435,310,121 won (the "53,435,310,120 won" stated in the complaint seems to be erroneous) shall be revoked.

2. Purport of appeal

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

1. Quotation of judgment of the first instance;

The reasons for this decision are as follows: "No. 14 of the judgment of the court of first instance", and 3,00 won or less per share to creditor financial institutions, including the plaintiff, even if ○○ agreed to compensate for losses on the part that the value of the shares of this case was less than 700,000 won per share, the transferee cannot assert rights under the preservation agreement of this case directly to ○○○, etc. based on the shares of this case. Thus, it cannot be said that the amount to be compensated by cash, etc. is included or embodied in the shares of this case. 4, if the value of the shares of this case is calculated as KRW 70,000 per share by the agreement of this case, it is contradictory that the agreement of this case was fully implemented in accordance with the agreement of this case, and further, if the value of the shares of this case is less than 700,000 won per share, the agreement does not have any meaning to give the shares of this case to 0,000 won per share.

2. The modified part;

In addition, on the ground that it is reasonable to view the market price of this case as KRW 700,000 by the National Tax Tribunal on July 28, 2005, the defendant dismissed the plaintiff's request for a trial on the disposition of correction of this case, and the plaintiff did not institute an administrative litigation on the judgment, and the disposition of this case is lawful and it is examined as it is based on the

The calculation of the amount of income and the calculation of the amount of income for each business year of a corporation is not an administrative disposition that is the object of an appeal litigation. Thus, if there is an error in the determination, it may be asserted in the procedure of disputing the validity of the taxation disposition, and the total amount of losses which belong or will belong to a certain business year is all in excess of the amount of losses under the Corporate Tax Act. The total amount of losses which is investigated as losses at the time of the final return of tax base, etc. of a corporation or the determination of the tax base, etc. according to the government's investigation and determination constitutes losses under the Corporate Tax Act. Thus, even if the disposition of corporate tax for a business year, which is based on the premise that the tax base is not deducted and the disposition of corporate tax becomes final and conclusive after the determination of the tax base, becomes final and conclusive, a corporation liable to pay taxes may again assert that there was losses which are separate from the final and conclusive disposition, or which may be deducted from the income under the relevant provisions of the Corporate Tax Act (see Supreme Court Decision 2001Du265252, Nov. 26, 2002).

With respect to the instant case, the validity of the disposition of this case, which is the rejection disposition of reduction request for the assessment of corporate tax for the business year 2004, is a dispute over the validity of the disposition of this case, which is the rejection disposition of reduction request for the assessment of corporate tax for the business year 2004 and the validity of the disposition of this case, to substantially dispute the validity of the disposition of this case for the business year 2004 and the validity of the disposition of this case for the assessment of corporate tax for the business year 2000, is not affected by the trial of the National Tax Tribunal's decision of this case because the business year subject to the disposition of this case differs from

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted on the grounds of its reasoning, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2007Guhap412, 2007.13]

1. The defendant's rejection disposition against the plaintiff on March 2, 2006 of the corporate tax base of 197,908,556,000 won and calculated tax amount of 53,435,310,121 won (referred to as "53,435,310,120 won" in the written complaint seems to be erroneous) shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff reported corporate tax for the business year 200 to the Defendant. On June 29, 2000, the Plaintiff calculated the carried-over loss as KRW 3,075,910,475,161 by including the 483,884 shares of the non-listed shares (hereinafter referred to as “instant shares”) issued by ○○ Life Insurance Co., Ltd. (hereinafter referred to as “○○ Life”) (hereinafter referred to as “instant shares”) (hereinafter referred to as “instant shares”) donated by ○○○○○○○”).

B. However, on December 13, 2004, the Defendant assessed the market value per share (hereinafter referred to as “instant market value”) as KRW 700,000 per share at the time of the donation of the instant shares, and accordingly notified the Plaintiff of the reduction of the Plaintiff’s loss carried forward for the business year 2000 to KRW 2,878,001,919,161 (hereinafter referred to as “instant correction disposition”).

C. On March 8, 2005, the Plaintiff filed a request for a trial with the National Tax Tribunal on the disposition of correction of this case. The National Tax Tribunal dismissed the Plaintiff’s request on the ground that it is reasonable to deem the market price of this case as KRW 700,000 on July 28, 2005.

D. Meanwhile, on March 31, 2005, the Plaintiff reported corporate tax for the business year of 2004 to the Defendant, and calculated the tax base and tax amount by deducting the amount of KRW 816,598,665,960 as of December 31, 2003, the balance of the deficit brought forward as of December 31, 2003, as amended by the instant correction disposition, from income for the business year

E. Thereafter, on the ground that the market price of this case was 291,000 won, the Plaintiff filed a claim for the reduction of the tax base of the corporate tax for the business year 2004 to the Defendant as KRW 290,595,982,507,687,426,507, and the calculated tax amount of KRW 78,48,915,277, and the calculated tax amount of KRW 25,013,605,156, respectively. However, on March 2, 2006, the Defendant respondeded the Defendant to the effect that the request for the reduction of the amount was rejected by the National Tax Tribunal on July 28, 2005 (hereinafter referred to as the “instant disposition”).

F. Accordingly, on March 17, 2006, the Plaintiff filed an appeal with the National Tax Tribunal on the instant disposition, but the National Tax Tribunal dismissed the Plaintiff’s appeal on the ground that it is reasonable to deem the market price of this case as KRW 700,000 on November 7, 2006.

Facts without dispute over the basis of recognition, Gap evidence 1, 2, Gap evidence 12-1 through 3, Gap evidence 13-15, Gap evidence 16-1, 2, Gap evidence 17, Eul evidence 1-1, and Eul evidence 2

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The defendant's assertion

(A) On August 24, 199, ○○○ (hereinafter referred to as “○○ Automobile”) donated 3.5 million shares to the creditor financial institutions of ○ Automobile Co., Ltd. (hereinafter referred to as “○○”) including the Plaintiff, calculated the value of the shares as KRW 700,000 per share to KRW 70,000,000 per share, and agreed to compensate for the shortage by means of adding the shares, if the value of the shares per share falls short of KRW 700,000,000,000 per share.

(B) In addition, 00,000 won per share of the instant shares, 70,000 won per share of ○○○ Group’s affiliates (hereinafter referred to as “○○ affiliated companies”) were purchased from a collaborative company of ○○ Motor Vehicle and retired officers and employees. The remaining financial institutions except the Plaintiff and some of the creditor financial institutions assessed the market value of the instant shares donated from ○○○○ to include the profits accruing from the receipt of assets, and some creditor financial institutions sold the instant shares donated from ○○ specialized in the securitization to 70,000 won per share of the instant shares.

(C) Therefore, since the market price of this case is KRW 700,000,000, the disposition of this case premised on this premise is lawful (with respect to the defendant's other arguments, the last part of Paragraph (d) below is examined).

(2) The plaintiff's assertion

(A) Although ○○○ et al. agreed on the donation of the instant shares to the creditor financial institutions of ○○ Motor Vehicle including the Plaintiff to calculate the value per share of KRW 700,000 per share, it cannot be readily concluded that the market price of the instant shares is KRW 700,000 per share solely based on the above agreement in light of the content of

(B) Furthermore, it is difficult to view that the price alleged by the Defendant based on the determination of the market price of the instant case is a normal price formed in general transactions. Considering other details of transactions or assessment of the instant shares before and after the instant donation, it is difficult to deem that the instant market price reaches KRW 700,000,

(C) Therefore, the instant disposition based on the premise that the market price of the instant case is KRW 700,000 is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The Plaintiff, a corporation that runs the banking business, etc. under the Banking Act, had a loan claim against ○○ Automobile as of 1999.

(2) However, when the ○ Automobile faces bankruptcy by the commencement of company reorganization procedures in around 1999 due to the business deterioration, etc., the ○○ and the ○ affiliated companies, which are major shareholders of the ○ Automobile, agreed on August 24, 199 with 16 creditor financial institutions of the ○ Automobile including the Plaintiff, as follows (hereinafter referred to as the “instant agreement”).

1. Donation of stocks)

1.1With a view to compensating for losses of creditor financial institutions anticipated in connection with the disposal of ○○ Automobile at an intentional level, ○○○○ shall donate 3.5 million shares of 4 million shares of ○○ Life to creditor financial institutions without compensation, which shall be contributed at the time of filing an application for corporate reorganization with respect to ○○ Automobile, and shall not exercise any right to ○○ Automobile without occurrence.

2. (Compensation for Losses)

2.1 ○○ and ○ affiliated companies shall ensure that the payments of 2.45 billion won shall be completed by creditor financial institutions in the manner set out in paragraphs 2.2 and 2.3 of December 31, 200 in order to compensate creditor financial institutions for their losses.

2.2 To this end, ○○ affiliated companies shall dispose of 3.5 million shares of ○○ Bio-resources, donated to creditor financial institutions pursuant to paragraph 1.1.1, until December 31, 200, and pay the proceeds of the disposal to creditor financial institutions. If the proceeds of the disposal fall short of 2.45 billion won, ○○ shall additionally donate to creditor financial institutions up to 50,000 shares of ○○ Bio-resources owned by the creditor financial institutions.

2.2.1 Method of payment after disposition shall, in principle, be in cash, but may be substituted by securities that may correspond to cash if there is an agreement with creditor financial institutions;

2.3In the event that the ○○ Bio-resources additionally contributed by ○○○○ is insufficient, the ○ affiliated companies shall substitute for compensating for losses by means of capital contribution (non-voting rights or delegation of voting rights) to creditor financial institutions or by means of a purchase of subordinated bonds issued by creditor financial institutions, in consultation with the creditor financial institutions, as much as the shortage is attributable to ○○ affiliated companies, provided that the ○ affiliated companies, separately from the creditor financial institutions which are inappropriate to compensate for losses

2.4 If ○○ and ○○ affiliated companies fail to perform by December 31, 200 paragraphs 2.2 or 2.3, 200, ○○ affiliated companies shall jointly and severally pay to creditor financial institutions an amount equivalent to interest in arrears in the bank account at the rate of overdue interest until the date of performance for the shortage in total of KRW 2.45 billion: Provided, That where the implementation of paragraph 2.3 is delayed due to the reasons attributable to creditor financial institutions’ procedural performance, ○ affiliated companies shall be exempted from paying an amount equivalent to interest in arrears in accordance with the said rate of overdue interest for the delayed period.

(3) After that, according to the agreement of this case on June 29, 200, ○○ agreed to donate 483,884 shares of this case to the Plaintiff and grant its disposal authority to ○ Securities Co., Ltd. (hereinafter referred to as “instant donation”) (hereinafter referred to as “instant donation”).

(4) Meanwhile, the details of the instant shares before and after the instant donation are as follows.

(A) During the period from July 19, 199 to July 28, 2000, ○○○ donated the instant stocks to 67 ○ Automobile Cooperation Company, and retired executives and employees of ○○ Automobile under the condition that the disposal price is guaranteed by KRW 700,000 per share, in order to compensate for losses of cooperative companies and retired executives and employees following the rearrangement of ○○ Automobile. The five ○ affiliated companies purchased KRW 460,00 per share from the subcontractor and retired executives and employees who acquired the instant stocks as above during the period from July 20, 199 to August 20, 190.

(B) According to the agreement of this case, 7 creditor financial institutions, including ○○ Guarantee Insurance Co., Ltd. (hereinafter referred to as “○○ Guarantee Insurance Co., Ltd.”) among the 16 creditor financial institutions, to whom the instant shares were donated, shall assess the amount of KRW 2,346,295 (which corresponds to 67.04% of the total donation shares of ○○○”) of the instant shares donated to them as KRW 70,000 per share, and include the amount as profit from the receipt of assets. The remaining creditor financial institutions, including the plaintiffs, included the market price per share of the instant shares from KRW 0 to KRW 560,00,00 as profits from the receipt of assets.

(C) On August 31, 200, 200, ○○○ Guarantee Insurance sold 87,741 shares of the instant case, which ○○○ Company specialized in the fourth securitization, donated to ○○○○○, to KRW 61,418,70,00 per share (700,000 won per share). The investors of the said limited liability company are most affiliated companies, and ○○ Guarantee Insurance repaid the principal and interest of the company bonds of ○○○○ in the sales price of the instant shares. The ○○○ Life acquired senior bonds issued by ○○○○ as the asset-backed assets of the instant shares.

(D) On May 22, 2000, 2000, 250, 250 million won per share of the instant shares were sold to ○○○ Co., Ltd. (hereinafter “○○○ Co., Ltd.”). Around June 2002, 200, 250 won per share of the instant shares were assessed as KRW 325,00 per share while borrowing the instant shares from a foreign country and offered them as security.

(E) The instant shares were traded at the price of KRW 150,00 per share from April 200 to July 2004 ( October 5, 2001) to KRW 403,150 per share ( July 16, 2003), and the price as of June 29, 200, as of June 29, 200, was KRW 370,000.

(5) In addition, the assessment details of the instant shares before and after the instant donation are as follows.

(A) The Korea Financial Research Institute estimated the net asset value per share of ○○ Life in the policy research report published in around 1999 as KRW 38,49.

(B) Around June 2000, ○○ Securities Co., Ltd. expected the share price after listing ○○ Bio-resources to be KRW 250,000 to KRW 300,000 per share.

(C) On October 21, 1999, the ○○ Accounting Corporation assessed the instant shares as KRW 705,110 per share in a report on the asset inspection and evaluation of the securitization assets of ○○ Guarantee Insurance, and on September 30, 200, on an on-site report for the assessment of public funds of ○○ Credit Group (on-site○ Credit Group), the instant shares were assessed as KRW 291,00 per share.

Evidence Nos. 3, evidence Nos. 4-1, 2, 5, 6, evidence Nos. 11-1, 2, 18, 19, evidence No. 20-1, 2, evidence Nos. 21 through 24, evidence No. 25-1, 26-2, and 2 of evidence Nos. 26, respectively, and the purport of the whole pleadings.

D. Determination

(1) First, we examine the grounds on which the Defendant asserted the market price of this case as KRW 700,000.

(A) As to the instant agreement, if the disposal price of the shares of this case which were first donated falls short of KRW 2.45 billion originally agreed to compensate for the difference, ○○ additionally donated 50,000 won to creditor financial institutions, ○○ affiliated companies purchase subordinated bonds issued by creditor financial institutions, or ○ affiliated companies purchase subordinated bonds issued by creditor financial institutions. If ○ affiliated companies do not compensate for losses of creditor financial institutions by December 31, 200, as the disposal price of the shares of this case by December 31, 200, ○ affiliated companies are jointly and severally with ○○○○ and jointly paying interest on the difference, it is difficult to view that the market price of this case does not reach KRW 70,000,000,000,000,000,000 won, based on the premise that the ultimate purpose of this agreement is to ensure that the market price of this case was less than KRW 70,000,000,000,00.

(B) Next, 00,000 won per share of the instant shares are purchased by 00,000 won from a collaborative company and retired executive or employee of ○○○ affiliated company. ① The said purchase was made in accordance with the prior plan at the ○○ Group level with a special purpose of compensating for losses incurred by the collaborative company, etc. according to the organization of ○○ Automobile. ② The said purchase was limited to the cooperative company and retired executive or employee as the other party and only limited to the instant shares donated to ○○○○○○ upon considering all the circumstances revealed in the pleadings of the instant case, it is difficult to view the market value of the instant shares as 70,000 won on the basis of the said purchase.

(C) Next, with regard to the inclusion of the market price of the instant stocks donated to the creditor financial institutions by the creditor financial institutions as KRW 700,000 per share of the stocks donated to the creditor financial institutions, the market price of the instant stocks is calculated as KRW 700,000 per share, and the inclusion of the instant stocks in the assets increase profits by the creditor financial institutions as assets increase profits is merely a simple accounting account for an individual corporation and it is difficult to accurately reflect the exchange value at the time of the instant stocks. ② Considering all the circumstances revealed in the instant pleadings, such as the fact that the financial institutions, among the above creditor financial institutions, assessed less than KRW 70,000 per share of the instant stocks as KRW 70,00,000,000,000,000

(D) Finally, with respect to the sale of the instant shares donated by ○○○○ to a specialized securitization company, in KRW 700,000 per share, based on a prior agreement with the relevant company for the purpose of the redemption of ○○ Automobile Bonds with the maturity of ○○○ Guarantee Insurance Co., Ltd., the market price of the instant shares was 700,000 won based on the foregoing asset-backed securitization.

(E) Therefore, the circumstances cited by the Defendant are difficult to view that the market price of the instant case is KRW 700,000,000, and there is no other evidence to acknowledge it.

(2) Rather, on May 22, 2000 near the point of this case’s donation, ① Company sold 250,000 won per share to ○○ Co., Ltd. on May 22, 2000, when borrowing funds from a foreign country around June 2002, assessed and offered as security the instant shares at KRW 325,00 per share; ② The instant shares were traded between April 2000 and July 2004 between KRW 150,000 per share and KRW 403,150 per share in the Internet market; ③ The Korea Financial Research Institute, ○ Securities Co., Ltd., and ○○ Accounting Corporation, etc., with considerable expertise in assessing the value of the instant shares, assessed the value of the instant shares at KRW 300,00 per share before and after the instant donation to KRW 700,000 per share.

(3) Therefore, the instant disposition based on the premise that the market price of this case is KRW 700,000 is illegal. Thus, it is insufficient to compute the legitimate tax base and calculated tax amount of corporate tax for the business year of 2004 by specifically recognizing the amount of the market price of this case only based on the materials submitted in this case. Thus, the instant disposition should be revoked in its entirety.

(4) On this ground, the defendant alleged that the corporate tax return for the business year 2004, March 31, 2005, reflected the correction disposition of this case, and did not constitute "an excessive return of the tax base and tax amount or an excessive return of the deficit amount or the tax amount to be refunded" due to mistake, etc. However, since the corporate tax return reflects the correction disposition of this case, it cannot be deemed that it did not meet the requirements under Article 45-2 (1) 1 of the Framework Act on National Taxes, the above assertion is without merit. In addition, the defendant dismissed the plaintiff's request for the correction disposition of this case on the ground that it is reasonable that the National Tax Tribunal should consider the market price of this case as 70,000 won on July 28, 2005, and the plaintiff did not institute an administrative litigation against the above decision, and thus, the correction disposition of this case was lawful. However, the correction disposition of this case was made for the business year 200, and it cannot be viewed that the above correction disposition of this case is legitimate in light of other circumstances.

3. Conclusion

Thus, the plaintiff's claim seeking the cancellation of the disposition of this case is reasonable, and it is decided as per Disposition by admitting it.

Relevant statutes

Article 45-2 of the Framework Act on National Taxes

(1) Any person who has filed the tax base return within the legal return term, may request from the chief of the competent tax office a decision or rectification of the tax base and amount of the national tax (where the decision or rectification is made pursuant to the provisions of each tax-related Act, it refers to the tax base and amount of tax after such decision or rectification is made) which has been filed for the first return and revised return,

1. Where the tax base and tax amount entered in the tax base return (referred to the tax base and tax amount after such decision or correction is made, if such decision or correction is made under the provisions of each tax-related Act), exceed those to be returned under the tax-related Acts;

○ Article 13 of the Corporate Tax Act

The corporate tax base on the income of a domestic corporation for each business year shall be the amount calculated by deducting the amount under the following subparagraphs in sequential order from the income of a domestic corporation for each business year:

1. The amount of losses incurred during each business year within the five years prior to the first day of the current business year which were not thereafter deducted in the calculation of the tax base;

2. Non-taxable income under this Act and other Acts; and

3. Amount of income deduction under this Act and other Acts.

○ Income for each business year under Article 14 of the Corporate Tax Act

(1) The income of a domestic corporation for each business year shall be the total amount of losses incurred during the business year deducted from the total amount of earnings during the business year.

(2) The amount of losses of a domestic corporation for each business year shall be the total amount of earnings during the business year deducted from the total amount of losses incurred during the business year.

Article 15 of the Corporate Tax Act: Scope of Gross Income

(1) The gross income shall be the amount of earnings generated by transactions which increase the net assets of the concerned corporation, except for capital input or financing and what is provided in this Act.

(3) Matters necessary for the scope and classification of profits under paragraph (1) shall be prescribed by Presidential Decree.

Article 18 of the Corporate Tax Act (Non-Inclusion of Evaluation Marginal Profit)

The following profits shall not be included in the calculation of earnings of a domestic corporation for each business year in calculating the income amount of the domestic corporation:

8. An amount appropriated to offset losses carried forward prescribed by Presidential Decree among the value of assets received without compensation and the amount of reduced liabilities due to exemption from or expiration of debts;

○ Acquisition value of assets under Article 41 of the Corporate Tax Act

(1) The acquisition value of assets acquired by a domestic corporation through purchase, production, exchange, gift, etc. shall be the amount falling under any of the following subparagraphs:

1. For assets purchased from a third person, the amount of the purchase price plus incidental expenses;

2. For assets acquired through the corporation's own manufacture, production, construction, or other corresponding methods, the amount of the cost of production plus any incidental costs;

3. For assets acquired other than under subparagraphs 1 and 2, the amount as prescribed by the Presidential Decree.

Article 10 of the Enforcement Decree of the Corporate Tax Act

(1) The deduction of losses under subparagraph 1 of Article 13 of the Act shall be made in sequence from the losses for the business year in which the losses first occurred.

(2) In the application of the provisions of subparagraph 1 of Article 13 of the Act, any of the following losses shall be deemed as deductions in the calculation of the tax base for each business year:

2. Losses carried forward appropriated by the value of assets received without compensation and the amount of reduced liabilities due to the exemption from or expiration of debts under subparagraph 8 of Article 18 of the Act;

Article 11 of the Enforcement Decree of the Corporate Tax Act

Profit under Article 15 (1) of the Act shall mean that provided for in any of the following subparagraphs, except as otherwise provided for in the Act and this Decree:

5. The value of assets received without compensation;

Article 18 of the Enforcement Decree of the Corporate Tax Act

(1) The term " carried forward losses prescribed by Presidential Decree" in subparagraph 8 of Article 18 of the Act means those falling under any of the following subparagraphs:

1. Deficits under Article 14 (2) of the Act (excluding the deficits received by succession under the provisions of Articles 45 and 48-2 of the Act) that are not deducted in calculation of the tax base for each business year thereafter pursuant to the provisions of subparagraph 1 of Article 13 of the Act; and

(2) The provisions of Article 10 (1) and (2) shall apply mutatis mutandis to the calculation of losses carried forward under paragraph (1).

Article 72 of the Enforcement Decree of the Corporate Tax Act

(1) The acquisition value under Article 41 (1) and (2) of the Act shall be the amount under each of the following subparagraphs:

5. Assets acquired through other methods than those as referred to in subparagraphs 1 through 4: Market price at the time of their acquisition.