In the Supreme Court

 

The 2454/19 a bad

 

 The Solberg * v. judge honor :before

 

From the ltd. access broadband connection Broadcom :for acceptance

 

Minutes of v.

 

 

Dan Gush rating official responder:

 

Request to appeal the decision of the district court in Tel Aviv-Jaffa from 20.2.2019 Ltd. 17419-02 18 given the

By the honorable judge the סרוסי.

 

 


Attorney Daniel פסרמן; Attorney Shlomo Aviad זידר; attorney live witnesses champion; Attorney Shirin Gabay Metzger


As for acceptance:


 

Pleasant Talia, Attorney                              : the respondent called

 

A decision

 

 

.1         request   to appeal  the  decision of  the  district court  in Tel  Aviv-Jaffa  from

Prompt for the request was rejected surround,סרוסי), the judge 17419-02) 18 from the ltd. 20.2.2019

"'S appeal the burden of proof burden bring evidence procedure the respondent."

 

 

Background and the decision of the district court

.2      for acceptance is an Israeli company, incorporated in ,2000 and all shares were held by an American company called Inc. Broadlight (below: company do.( in ,2012 purchased all shares of the company would by another American Company, Broadcom Corporation (below: Broadcom,) in return for the amount of about200- million dollars the United States in three months.

After then, sold for acceptance of the rights Intellectual property law the company listed in the Cayman Islands, broadcom group, in return for the amount of about59.5 the million dollars in the United States; at the same time, two other agreements signed between for acceptance, and broadcom broadcom, and another group which they will provide  for acceptance of  research  and development services,  marketing and technical support in return to cover The costs of extra spacious space agreed upon.

 

 

.3 on 10.1.2017 gave the respondent the applicant and the details of the reasons a mole order issued in relation to the declining income tax for .2012 acting set the respondent, that the transaction between the asking  and the broadcom reported  that the fair market, and in return is different than that which is determined between the parties that there is no special relationship between them. It was determined,  that as part of the transaction,  not sold  only rights  of Asserting  Intellectual property law - on sale and fair is  not part of the respondent - but  also sold most of the functions,  assets and risks risksand assets ,functions, to make a long story - (FAR by asking for a deal. The value of assets sold (intellectual property together with the(FAR-  is estimated   amount  of  approximately168.5 the  million  dollars in  the United States,  who were  on  sale  approximately 659,677,500 NIS, and remote adjustment in respect of the tax component, assessed settled amount of 879,570,000 NIS. In addition, it was determined that there is to see the difference between the amount transferred when the actual sale, and settled at the assets sold, loan given for acceptance not market conditions - and therefore take the obligation also interest income the amount of NIS 1,735,117.

 

This .4 the assessment appealed for acceptance, ובגדרי access appeal procedure the request's appeal the burden of proof burden bring evidence, the respondent; alternatively, asked the court to order that the respondent opens bringing ובהעדת evidence and witnesses on his behalf, while decision a side the burden of his identity at the  end of the  procedure.  Four arguments  were standing at the  base of  this request: first,  claim

Asserting that the reversal of the burden required by Section 85a Income Tax Ordinance [ New Version] (below ): the command; two, the claim that the responder assessment is based on the re-classification of the transaction, carried out by the respondent by virtue of his authority by section 86; party command, because שהיפוך burden should method

Asking for even if the assessment is not done, the re-classification of artificial transaction, but the different classification; and

  הלקוניות Wednesday, because the claim of the assessment.

 

 

.5    decision  dated 20.2.2019,  rejected the  district court  the  request  on all its arguments. 's of the decision has been given to the question of the distinction between the different classification of the transaction, and the contention that the artificial transaction ')re-classification,) and also cause blockages with the imposition of the burden of proof at the threshold of income tax assessor. Regarding this , the Supreme Court, that שומתו of the respondent is not based on his authority reclassify artificial transaction, according to Article 86 Ordinance. This authority aimed to situations which receive income tax assessor the transaction as it was introduced Before him, but wish to refer to it

Otherwise for tax assessment purposes only (i.e., to the re-classification, for tax purposes.) However , On the present case , it was determined that the income tax assessor "does not accept the representation facts of the appellant in its That is sold only the its intellectual property [...] and, in fact, claims that the world act," i.e.,  in reality living,  occurred another transaction is different in scope and use than it was introduced by the appellant,"  which denied asking incessantly report for tax purposes (paragraph 26 of the decision;(20.2.2019 "according to the respondent, the real economic substance of the transaction, as expressed in the world act, is a deal to sell FAR so just the respondent that this is a different classification of the transaction, and not more. It was the respondent receives the representation facts of the appellant [...] Then only

So there was no special tools והשיוריים מהידרשות that article 86 Ordinance)name, .(28-27)

 

 

.6         also rejected claims for acceptance, according to which the responder has carried out the different classification of the transaction,

Was it to prosecute the relevant general, is a method for acceptance of the State of California, and show why unjustified whereby change the release of the transaction. The claims were rejected font, under the assumption that for asking that the court is indeed as material on-hand; the court is required to prosecute an expert opinion by asking foreign, and determined that no further convinced that the law of the  State of California, the  body,  not  allows you to change  the classification of the transaction. The prompt for the reversal will burden By virtue of Section 85a command are also rejected, the taste the responder is not part of the data presented by asking him, as required for reversal of the burden within the scope of this section, but thought that they do not represent the full scope of the transaction. Finally, rejected the claims reversal will burden  for לקוניות  of appraisal,  the taste the plaintiff bank received answer to a request regarding the discovery of documents,  and that the   appraisal and detailed  enough  to allow  her to deal with it properly  without

שיקופחו rights,  even if not open bringing ראיותיה.

 

 

From here request appeal before.

 

 

Claims the parties

.7     because her claims for acceptance,  that  the  district court  did not  properly implement  the  art measure to distinguish between the different classification, and the re-classification, and that was wrong, in reliance on the "different reasoning, foreign laws Heart known these contexts, and to ignore that the responder does not indicate the different classification under the relevant general law." Later that loaded, that the Court erred it stated that the appraisal is taking on a different classification, and in spite of the fact that the responder did not show why, according to the relevant general law - is according to the law of the State of California - have to make the change, indicating that it was according to the execution of the re-classification." In this context is loaded, That according to the laws of the State of California, you can perform a different classification of the transaction as carried out by the respondent, among other things, because the laws of the State of California does not recognize the term.FAR-  more loaded,  that the  court , as he  was the


 

The classification is different, and he had to "dive in head over heels the laws of the State of California," to decide on the question of justification to change classification. The argument put replacement, back asking for even the 89 that even if we are dealing classification is different, and still worthy to impose the burden of proof on the respondent.

 

 

.8    on the  basis of the load,  that his mistakes  of  the District Court will dispose of the management procedure itself, negotiations to appeal already at this stage will prevent incorrect and efficient management of the main procedure - as all one of what the routes and requires a different response to claims - clarification

The general court, or למלאכותיות investigating claims relating to the transaction.

 

 

.9 the       response  , the respondent claimed  that the  law  request to be rejected  out of hand,  because she  was

 Within the scope of  Article  1 (6)in  violation of the law (the types of decisions that will have to appeal, the T2009 Law- (hereafter: the order.) in his mind, already the question of transferring the burden of his can  be decided in  only at the end  of the procedure, and therefore the decision is made the burden of fetching the evidence and order הבאתן.  More  believe the respondent, that the request is not faithfully measure for the  provision of

 To appeal according to Article (41in) of the courts [and] the d1984 -- (below: law.) loaded,  that unmistakable דיונית dealing decision, regarding the  burden of fetching the evidence and order הבאתן, intervention reduced and maintained to exceptions, which discussed in this present case is not one of   them. Which to the incorrect management  of the procedure, it is argued  that the scope of the injury as possible במבקשת limited, this may teach the responder method take advantage of a request - reversal of burden and bring evidence for the subscribers order; that the decision Is not preventing גרסתה of the applicant view the factual basis, but only Changes the order of bringing evidence; and the fact that the decision actually shift the default rooted, stating that the burden of proof  is on the wage earner tax appeals. He stressed, that although it may not be possible to cure any defects in the   decision in question within the scope of the appeal  the final judgment -  but given the technical nature of potential harm to low במבקשת, there is no justification for that request. In particular emphasized, that in any case if the decision to appeal on the clay, and determine that the assessment Based on the re-classification, הנטלים - municipal governance

The threshold of the Respondent, and in fact this is an issue at risk regarding the incorrect management of the procedure.

 

 

.10 the       respondent believe that the decision is justified also merits. loaded, that the district court went

The Entrenched perceptions about the laws of the tax laws, whereby tax deal is done by economic essence. He stressed,  that  in carrying out the  different classification, and  examines   the official appraisal what   really happened,"  i.e.,  do Factual reality is compatible with the display presented by the wage earner from a factual and legal. However , the re-classification is performed on the readiness and residual, an easy-to-use only where income tax assessor receives the transaction as it was introduced by the wage earner, "and he shares that this happened in the world


 

Act, but the position is not a legitimate tax planning" (Section 58 Response of the Respondent.) Therefore, matter in the present case this is a different classification, and as the claims of income tax assessor were directed toward the actual events, and the Exposition presented in front of the facts in the world Act (as opposed to change the results  of  a given factual basis on the  tax system  only,  then  it shall be on the classification

Restart.), he stressed, that the respondent received the reported of asking in relation to the sale of intellectual property, but stated that the practice was sold to its activities, as part of the sale is not reported. which the additional claim that has become the הנטלים שעסקינן as also on the different classification, and argued that asking is in a better position to prove the Counts - information regarding business operations before the transaction  is followed by  hands,  and all  that  is required to prove  is  that the  functions material

Sold (the,(FAR- continue to be carried out under one roof after the sale.

 

 

.11   has oscillated the responder's reply emphasizes for acceptance,  that  most of  the request is not  in bringing evidence, that if the protracted nature of the assessment - and that the decision on the protracted nature of the assessment here or here affect the full procedure clarification required within the scope of the appeal. loaded, that although the trigger for discussion the protracted nature of the assessment was the discussions, the issue of natalie proof - but the decision deal mainly onthe authority from which it got produced appraisal and legal it will move forward the entire tax appeal, and thus is also the bar by" (Section 3 response for acceptance.( which renders the  section  (6)1  order loaded,  that  is the decision object of the request deals with bentley's Pub-this of proof - the burden of bringing evidence and claimed his,  there is no  determination is only evidence relating to arrange chicken. asking for back on the rest of the Counts, according to which the decision is essential for the correct management please of the procedure. The Respondent filed also is another response, it reiterated , that request is essentially a דיונית, lack reversal burdens at the procedure - even for a decision on the request, the court is required to discuss substantive issues of character appraisal. further emphasized, that the right place of claims as לפרשנותן of the classification of the different powers and compared to the re-classification, and making הדיוניות בפסיקת in order instances, is within the scope of the appeal the final judgment. Finally loaded, that seeks not voted the damage or miscarriage of justice that may be caused due to the clam till its final appearance in the decision, because the default As Natalie will approach

The proof, the honest.

 

 

והכרעה discussion

.12        after I was required to claims the parties on both sides, the opinion of the District Court, I came to the conclusion that the court rejected the request. As will be detailed, no בהותרת decision on sincere

Because creating the potential to manage the procedure in unnecessary or damage justifying intervention. In addition, this preliminary procedure is not the right place to be required to most of the claims that have to decide

Method for acceptance, which if discussed which יתייתר, to a great extent, the discussion of the tax itself.


 

.13 is the beginning of wisdom, the essence of the normative consumption for understanding things. informed of the laws of the tax is, that the taxation of a deal is the economic substance, even if both sides another הכתירוה deal or value it in a different (See, among other things, by a real estate tax manager 5025/03 The Tel Aviv v. The Orly airport building and development Company Ltd. ;(16.8.2006) by a סעדטמנד 750/16, zion v. the income tax official blocks (28.2.2019) (hereafter: Interest Ben Zion.() in due course

 Income tax assessor to the nature of this economic, open before him, and a number of ways; as it was, how are the alternative,' and to exhaust the one לרעותה before being needed. through the first passes on the route, the general court. within the scope, will examine income tax assessor is in the light of the instructions of the fabled Malabar Coast, the tax laws, such as the laws of corporations or contracts, have to perform the classification is different," i.e. to classify the transaction differently than presenting both sides (by a 3415/97 income tax official for big enterprises  v. Yoav Rubinstein & Co. building development and financing company Ltd.,  and the d  57(5) 923-922 ,915;(2003) by a 4374/05 said Yakov Reuveni v. the income tax official Tel Aviv 4 (19.9.2007) (hereafter: interest said Yakov Reuveni;(( in so, you can do also use the tax laws, which often define  actions and,  for the purposes of taxation,  unlike the settings as regards law a day (for example, to the gift transaction as a sale for tax purposes, the same of the judicial branch by barron, regarding a Zion; see also David גליקסברג borders tax planning - re-Classification of transactions for tax purposes 17-9 (1990) (hereafter: גליקסברג.(( the second way to the re-classification of the transaction. indoor anti-planning is the norm in the past among other things in some שבתנאים 86 Ordinance, permit to the income tax assessor ignore elements of a deal, and are classed as to re-imposition of tax. official

The assessment may do so, if you find that there is no point in a defense-in-depth commercial to deal as Done. Where income tax assessor does the use of this authority, the burden to prove the terms of the enabling authority -  will be  at his doorstep (by a 102/59 income tax assessor, Jerusalem v. "איסמר" visitor trade Company Ltd., and the minute  hand 2165 (1960) (hereafter: איסמר interest;)  by a 10666/03 Shitrit v.

.((30.1.2006) 18 Paragraph4, Tel Aviv Jaffa rating official

 

 

.14       stated, two of these alternate routes are not; the income tax assessor to exhaust the route

The different classification is required before the possibility  of the re-classification."  The importance  of the  order of reference

To the routes, this Court was not one:

 

 

"There is to distinguish between claims regarding the classification of the transaction and the claim of being of a deal - artificial. At first we must determine, must specifically the factual basis, if the nickname is called the parties the transaction subject disagreement  with  the official appraisal   is;  Berry,  that  reality the factual basis to the evidence is that, at the end of which, the release of the transaction, and the dress can be used between the parties agreement .[...] if the court comes to an opinion that the transaction that took place between the parties is different from the external nickname that gave her, it תמוסה as its factual and legal reality. This initial stage, referred to as the classification phase difference, and  we do not need to examine the מלאכותיותה ולהוראת deal Section 86 of the Ordinance" (by a 7493/98 Sharon v. the income tax assessor .((15.12.2003) 17 paragraph, asingle national assessment -

 

 

See for yourself, first consider if it should classify the transaction differently, according to the facts relevant  and adapting to the instructions of the general court;  only if is,  that the transaction made,  i.e. -

The assembly is compatible with the facts, how to viewing by both sides by the general law, you can contact to the re-classification:" "Only if based on the relevant facts cannot classify the transaction differently than שסיווגה wage earner, allowed the tax authorities argue that this is where artificial transaction"); see also: interest said Yakov Reuveni, Paragraph ; Interest Ben Zion, Paragraph 6 = גליקסברג, on page.(19 tongue

Then, the anti-planning Authority in 86 ordinance is residual.

 

 

.15  method for acceptance, the  respondent carried out,  de-facto annexation, the re-classification  of  the transaction.  This is the basis for regarding the things said about Ben Zion which "the general law is not  applicable, and given the fact that the action described by the wage earner, [...] is indeed action performed and so the shares" )name, Paragraph 12.(but not so are the things, and that is that

Interest; on this match - The representation described in the sale, and what that in practice - shares the respondent. in its entirety, not sold the only intellectual property, but was significantly more double deal, שנחבאת behind the representation of the narrow and thin it. similar to this distinction is the foundation

The difficulty that both sides were trying to reach to the quality of the appraisal in question.

 

 

.16 to illustrate the difficulty you can use similar regarding the issue, is the taxation of the false transaction" - an additional 86 listed in the Ordinance. deal מקבילתו הבדויה is in the world of contract tax out of sight; בגדריה"No sides are interested in the existence of the contract as it is reflected in the outward" (by a 4015/95 income tax official Jerusalem v. Barzani, and the nev(2) ,269 276 (1998) (hereafter: Interest Barzani;) See also interest איסמר.) set up a deal כבדויה is a question of fact; an hour later proof has been proven according to this, the transaction is void because of being illusory contract , under the general law (Laws of contracts) - and, that there is 'Ignore' it without resorting to the section 86 order: "A שמבירור real tax facts indicate that the transaction


 

That is a fiction, it is void on the civil law itself [...] therefore, there is no really need to run the ignored sections [Section 86 Ordinance - v. 's], in this case , Aaron Nathan Juran absent ' the different classification  of the transaction for  tax right to irrelevancy  of the transaction " and man-made phrases

.(277 on page,barzani interest ;(1990) 48 ,43  as

 

 

.17       it should be clarified: not loaded before that dealing deal false, and not as of utter by position. Things Were brought to illustrate the the Geometric size and location of the position of the respondent assessment, stating that the assertion Contract does not reflect the actual situation (and hence the imagination,( distinguish false deal, we do not reflect the artificial transaction." Luz appraisal is in fact the position of the respondent that you can classify The Transaction differently, on the basis of the relevant tax facts - i.e., on the basis of his position, by which  certain functions  out in practice  under one  roof of asking. income tax assessor Was arrested then before woke up necessary to use that השיורית for the re-classification; and It is the is the first stage of the analysis - examining the transaction goggles general court (ובענייננו,

The laws of contracts.)

 

 

 .18 a significant part of the claiming asking concerns regarding this; it is high  on the island-הידרשותו of the respondent to prosecute the relevant general according וגוזרת - a result that the appraisal is based on the classification is different." believes, was the supreme court "dive in head over heels" the laws of the State of California within the scope of the

 Request preliminary,  for an examination of the nature  of the assessment of the respondent (Paragraph 30 the request.) In this context is to distinguish between two questions, this tied in the arguments for acceptance: one, what is the nature of the normative assessment of the respondent; the second, the fragrance שעסקינן as a different classification, would change the release of the transaction justified on the basis of the relevant general law. The first question is the focus of  הנטלים reversal request;  the second question  is the  object of the appeal of his body. The questions are separate: for an examination of the first question, There is no need to stand on the court and the contents of the laws of the State of California, that is - the degree of justification, according to the general law, to change the classification

His body.  It  should turn out to be the main procedure, and not within the scope of the preliminary request reversal will burdens,

 Before it began hearing evidence ( for example, a foreign expert trial by asking, not yet finished to write the opinion, and submitted for Symbolising only.) The rights, even on the

Claims that there is no defect in the decision which may lead to the incorrect procedure continue on the way.

 

 

.19        given the warranties, not שוכנעתי that the gap between the main procedure in light of the clarification required

 The Appraisal as a classification of different classification, and this was required it was this in the re-classification, is significant as argument for acceptance. tax appeal itself revolved around, essentially, around the question of the factual basis of the sale of assets given to the name of the code";FAR this question already will be charged evidence, will be classified


 

Appraisal as שתסווג: if the fragrance classification is different, dealing, you will be required for acceptance to show that the contract presented to prepare you for the actual all that and we are out of sight , i.e., that  theFAR- shattered functions are under one roof;the like, what we were going the route of the re-classification, and was on the respondent to prove that the viewing of the transaction problem sold intellectual property only misses decorated trademark thoroughly. Also here, litigation proceedings יסוב  largely around the question under  one roof of which The company are functionsFAR- in practice,  and whether it was justified to isolate the deal presented to the income tax assessor only the intellectual property. In light of the above, the potential damage

For either side, as well as through the unnecessary procedure or the wrong way - not the כצעקתה."

 

.20 the   end of  which,  the request for an appeal -  is rejected;  for acceptance  will bear the  expenses the respondent

  The amount of NIS 20,000.

 

.(28.8.2019) the 19th of Av in the about, the day was given

 

 

 

That and and .

 

 


 19024540 influences_O03.docx http://supreme.court.gov.i, 077-2703333 web site; the Tal , information center