Seoul Administrative Court-2015-Gu Partnership-58935 ( November 10, 2016)

Seocho 2014Ch 801 ( December 31, 2014)

Where a major type of business is not changed, the method of evaluating stocks issued;

Where the main business is not changed, it is legitimate to calculate the net profit and loss value per share on the basis of the weighted average amount of net profit and loss per share for the last three years under the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and evaluate the gift value based thereon

Article 56 of the Enforcement Decree of the former Inheritance Tax and Gift Tax Act (Calculation Method of Net Profit and Loss for the latest three years per share)

Article 17-3 of the Enforcement Rule of the former Inheritance Tax and Gift Tax Act (the method of calculating net profit and loss for the last three years per share)

2016Nu77355 Revocation of Disposition of Imposing global income tax, etc.

- Appellants

○○ et al. 6

- Appellants

AA Head of tax office and 4

June 30, 2017

September 15, 2017

1. Of the judgment of the first instance court, the part against the Plaintiff EE, FF, and GG of the Head of the ee Tax Office against the Plaintiff EE, FF, and the Plaintiff E-E, FF, and GG’s claim against the Defendant E-e Tax Office corresponding to the revoked part is all dismissed.

2. All appeals filed by the plaintiffs are dismissed.

3. (a) The total cost of the litigation between Plaintiff EE, FF, GG and Defendant ee-head of the tax office is Plaintiff EE, FF, GG;

B. The costs of appeal between Plaintiff AA, BB, CCC, DD and the remaining Defendants are assessed against the said Plaintiffs:

Each share shall be borne.

1. Purport of claim

Each disposition in the attached Form No. 1 which the Defendants made against the Plaintiffs on the date and time stated in the Disposition Date column shall be revoked in all of the imposition dispositions in the attached Form No. 1.

2. Purport of appeal

【Plaintiff AA, BB, CCC, DD】

In the judgment of the first instance court, the Plaintiff AA, BB, CCC, and DD parts shall be revoked. Defendant Aaa director of a tax office, BB director of a tax office, CC director of a tax office, and DD director of a tax office shall revoke each of the dispositions stated in the separate sheet column and the notified tax amount as to the above Plaintiffs on the date and time stated in the separate sheet of imposition.

【Plaintiff EE, FF, GG】

The portion of the judgment in the first instance court against Plaintiff EE, FF, and GG loss shall be revoked. The part of the disposition of KRW 177,885,530 of the disposition of KRW 210,441,020 of the gift tax imposed on Plaintiff EE on November 1, 2013, and the part of KRW 98,365,780 of the disposition of KRW 114,643,530 of the gift tax imposed on Plaintiff FF, and KRW 93,017,430 of the disposition of KRW 109,295,180 of the gift tax imposed on Plaintiff GG, shall be revoked.

【Defendant ee Tax Director】

The provisions of paragraph (1) shall apply.

1. Quotation of the reasons for the judgment of the first instance;

The reasons for this judgment are as follows. The fact-finding and decision of the first instance court on title trust is justifiable even if the evidence submitted by the plaintiffs to this court is added to the evidence presented by the plaintiffs, and the facts-finding and decision of the first instance court on title trust are just and they are identical to the reasons for the first instance judgment except for addition of the judgment that there is no error as alleged by the plaintiffs. Thus, they are cited in accordance with Article 8(2)

The following shall be added at the bottom of the 15th page:

Article 17-3 (1) 3 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act does not define the "major type of business": Provided, That Article 17-3 (1) 7 of the same Act provides that "a case where the normal sales period is less than three years in the main type of business (referring to the business which is the largest value of the tangible fixed assets used directly by the corporation)" is defined as the main type of business. In addition, Article 6 (2) of the Corporate Tax Act provides that "the location of the main place of business or the main place of real estate" means the location of the place of business or the real estate with the largest business revenue revenue amount in the immediately preceding business year, and the Income Tax Act

Article 85 of the Enforcement Decree of the Act defines the primary business which is the standard for determining whether a business operator with two or more places of business is a small or medium business, refers to the business with the largest amount of revenue, and Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act stipulates that where a business operator operates two or more different kinds of business in determining the scope of a small or medium business, the business

The parts from 16 pages 10 to 20 pages 11 shall be modified as follows:

In light of the definition of the “major type of business” as seen above, it is reasonable to deem that the instant company’s primary type of business was a sublease business even before the instant company closes its accommodation business, in light of the following circumstances, which can be seen by comprehensively considering the facts acknowledged above and the purport of the entire pleadings in the statements in the evidence Nos. 1 and 25. Thus, it is reasonable to deem that the instant company’s primary type of business was changed in the business in the year 2009, which is the business year when the third anniversary of the appraisal base date of the instant stocks falls.

① The instant company started business on September 1, 2008 and run a sub-lease business by sub-leaseing the instant building underground floors, the first and third floors, and the rooftop floors until September 30, 2009. At the same time, the instant company run a lodging business by directly operating the elel with the fourth and fifth floors of the instant building. On October 2009, the company closed the lodging business and then sub-lease Plaintiff BB with the fourth and fifth floors of the instant building, and thereafter, only the sub-lease business.

② The main tangible fixed assets directly used by the instant company in the sublease business and the lodging business are the instant building; the area of each floor of the instant building is an underground floor 143.88 square meters; 693.62 square meters; 714.75 square meters; 714.75 square meters; 714.75 square meters; 4 stories; 692.76 square meters; 692.75 square meters; and 692.75 square meters for five stories; (i) the area of the instant building directly used in the sublease business; (ii) 2,267 square meters; (iii) the area of the instant building is 143.8 square meters; + 143.8 square meters; + 693.62 square meters for one story; + 714.75 square meters for two stories + 3714.75 square meters for two stories; (iv) the area directly used in the lodging business is more than 1385.51 square meters.

③ Although there is no material directly aware of the value of the instant building, it is in light of the empirical rule that the value per unit area of the 1 and 2nd floor of the instant building exceeds the value per unit area of the 4 and 5th floor. Therefore, the value of the portion directly used for the sublease business among the instant building is higher than the value directly used for the lodging business, and eventually, the value of the tangible fixed assets in the sub-lease business seems to be the largest (the Plaintiff did not submit the material concerning the tangible fixed assets directly used for the lodging business except the 4 and 5th floor).

④ The sales revenue of the instant company’s sub-lease business (the reported amount plus the investigation revenue of the tax authority; the same shall also apply to the sales revenue of accommodation business) in 2009, which was three years before the base date of appraisal of the instant stocks (as of May 3, 2012), was assessed as the sales revenue of KRW 1,162,392,89 and the sales revenue of accommodation business as the sales revenue of KRW 1,138,862,364, which was larger than the sales revenue of accommodation business.

B) Sub-decisions

Therefore, it is legitimate for the instant company to calculate the net profit value per share of the instant company based on the weighted average amount of net profit and loss per share of the instant company for the last three years under Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act in 2009, as it does not fall under the case where its principal business type was changed" under Article 17-3(1)3 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act. Thus, it is legitimate to assess the value of net profit and loss per share of the instant company based on the weighted average amount of profit and loss per share of the instant company for the recent three years according to the formula under Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act. Therefore, this part of the Plaintiffs’ assertion is without merit (and as seen earlier, the Plaintiffs’ assertion that the value per share of the instant company should be assessed based on net asset value in calculating the gift value per share of the instant company on the premise that the primary business type was changed.

Between 00 21, 4 and 5, the following shall be added:

As the instant company’s management of the instant building excluded the service charges for the management of the building to be paid by the Plaintiff AA to the instant company, the rent was set lower than the market price. The Plaintiff AA asserts that the instant company’s net sales and management expenses of KRW 486,535,142 for the year 2009, the management of the instant building, and KRW 258,756,392 for the sales and management expenses of KRW 258,756,392 for the year 2007, which the Plaintiff AA managed the instant building, should be deducted from the income of the Plaintiff AA’s rent. However, there is no evidence to deem that Plaintiff AA paid the instant company the service charges to the instant company, or that the service charges for the management of the building and the service charges constitute the difference between the market price and the rental fees under the contract. Moreover, the Plaintiff AA’s net sales and management expenses are the consideration for benefits or services, and thus, the foregoing difference between the above net sales and management fees is not reasonable.

2. Conclusion

Therefore, all of the plaintiffs' claims in this case must be dismissed for lack of reasonable grounds. Since the part of plaintiffs EE, FF, GG and defendant e-mail in the judgment of the court of first instance is unfair for different conclusions, the appeal by the director of the tax office of e-mail shall be accepted, and the part of the judgment of the court of first instance against the above defendant in the judgment of the court of first instance shall be revoked, and all of the plaintiffs' claims against the above defendant in the judgment of the court of first instance shall be dismissed,