DR & AJU successfully overturned the National Tax Service (NTS) decision regarding the acquisition of unlisted shares by KOSDAQ-listed Company F from the CEO of Company U, an affiliate of Company F. The NTS had argued that the shares were purchased at an inflated price to benefit the CEO. The dispute centered on whether the income adjustment notice in question, which assessed the CEO as the income beneficiary, was unlawful under the Disaffirmation of Calculation by Wrongful Acts of the Corporate Tax Act.

In an effort to avoid delisting from KOSDAQ due to poor management, Company F entered the energy industry and acquired 55% of Company U's shares from its CEO at a price that included a control premium ("disputed share transaction"), due to Company U’s high growth potential. Following this acquisition, Company F merged with Company U without a capital increase. Company F and the CEO of Company U conducted the disputed share transaction based on the share valuation results from several accounting firms.

However, the NTS excluded the share valuations conducted by the accounting firms for both Company F and the CEO of Company U. The authority deemed the disputed share transaction an economically irrational high-price purchase due to the special relationship between Company F and the CEO of Company U. Consequently, the NTS recalculated the transaction amount using the supplementary valuation amount under the Inheritance Tax and Gift Tax Act and issued an income adjustment notice. In response, Company F filed an appeal against the NTS Commissioner.

DR & AJU represented Company F, contending from multiple perspectives that the share acquisition transaction between Company F and Company U was conducted according to the assessment of several accounting firms at fair market value between two equal parties to mutually maximize economic profit. We asserted that the transaction was conducted freely and could not be considered abnormal or inconsistent with sound social norms and trade practices. The NTS National Tax Review Committee accepted these arguments and cancelled the full income adjustment notice, which amounted to approximately KRW 10 billion.

In this case, the NTS had issued an income adjustment notice of a substantial amount just before the expiry of the statute of limitations for tax assessment after receiving a surtax notice from the Financial Supervisory Service (FSS) for suspected high-price purchases. This case is of great practical significance as it confirms that the NTS cannot uniformly apply the disaffirmation of calculation by wrongful acts to suspected high-price purchases between specially-related parties under the Corporate Tax Act, especially when the transaction was conducted at fair market value between two parties of equal standing.