Dongbu Tech Co., Ltd. (Law Firm Squa, Attorneys Park Young-chul et al., Counsel for the defendant-appellant)

Samsung director of the tax office (Law Firm Dakon, Attorneys Seo Jong-ho et al., Counsel for the plaintiff-appellant)

March 13, 2015

Seoul Administrative Court Decision 2013Guhap58344 decided June 27, 2014

1. The defendant's appeal is dismissed.

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

3. The Defendant imposed corporate tax of KRW 67,107,749,780 (including additional tax of KRW 27,573,762,764) on the Plaintiff on March 12, 2013 and special rural development tax of KRW 10,051,04,240 (including additional tax of KRW 4,281,545,221) on the Plaintiff on March 12, 2013 shall be suspended until the judgment of the instant case becomes final and conclusive.

1. Purport of claim

The Defendant’s disposition of imposing corporate tax of KRW 67,107,749,780 (including additional tax of KRW 27,573,762,764) and special rural development tax of KRW 10,051,04,240 (including additional tax of KRW 4,281,545,221) for the business year of 2007 against the Plaintiff on March 12, 2013 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. All the plaintiff's claims are dismissed.

1. cite the reasoning of the first instance judgment;

This judgment is based on the reasoning of the judgment of the court of first instance, except where the following is added, and thus, it is based on Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

(1) On the 19th page 1, the following shall be added:

[This case: (1) The defendant has the following facts: (2) the fair value of the assets succeeded in relation to the combination of 2,046,598,00,000 and the fair value of the inherited assets in relation to the combination of 1,731,879,000,000 won; and (3) the fair value of the assets succeeded in relation to the combination of 23.0 billion won in relation to the combination of 23.0 billion won in the audit report of this case (Evidence No. 4) of this case for the business year of 2007; (2) the difference between the acquisition value of the assets and the net assets of this case for the period exceeding 10 years which the company is expected to incur economic benefits; and (3) the difference between the acquisition value of the assets and the net assets of this case shall not be considered as 9.0 billion won in accordance with the business regulations of the Korea Tax Service.

(2) On the 19th page 15, the following shall be added:

[This case’s appraisal practice standard (Public Notice No. 2014-813 of the Ministry of Land, Infrastructure and Transport) recognizes the method of deducting net asset value excluding goodwill from the value calculated by multiplying the number of issued stocks by the price per share of issued stocks in the case where the target company is listed on the securities market or the KOSDAQ market," as one of the transaction practice comparison method, the Defendant asserts that the instant transaction price is calculated by multiplying the number of issued stocks by the number of issued stocks of the same company; however, Article 24(4) of the former Enforcement Decree of the Corporate Tax Act provides that, in principle, the method of calculating goodwill shall be limited to depreciable assets paid for business value due to the trade name, transaction relations, and other trade secrets of the merged corporation, etc., and thus, the concept of business right shall be limited to the concept of the business right, so long as the Plaintiff’s business right is not recognized by the merger comparison method as the case’s net asset value calculated by the merger comparison method as the case’s calculation method.

2. Conclusion

Therefore, the plaintiff's claim is justified, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed, and it is so decided as per Disposition. Meanwhile, even though the court rendered a judgment revoking the disposition of this case, it is recognized that if the above disposition is executed, it would cause irrecoverable damage to the plaintiff and thus it is necessary to prevent it, and there is no other evidence that the suspension of execution would have a significant impact on the public welfare. Thus, the execution of the above disposition shall be suspended ex officio until the judgment of this case

Judges Cho Jong-tae (Presiding Judge)