[2] The validity of taxation disposition that misleads the legal and factual relations of the taxable object

[3] The case reversing the judgment of the court below which held that the taxation of deemed donation on the nominal trust act conducted for the avoidance of administrative regulation and the convenience of purchase is null and void as a matter of course

Article 32-2(1) of the former Inheritance Tax Act

[3] Where a company has actually purchased land and completed the registration of ownership transfer under the name of its executive or employee, it should be deemed that there was an objective reason to deem that the company would have donated the land to its executive or employee; however, whether the company would avoid gift tax or trust the land to its executive or employee due to the inevitable reason to avoid restrictions under the positive law or to avoid the landowner's refusal of cooperation without such a purpose; and further, at the time of the disposition of deemed donation, there is room to dispute over the interpretation of Article 32-2 (1) of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 190) as to whether the purpose of tax avoidance is limited to the purpose of gift tax avoidance, or the purpose of tax avoidance includes the purpose of other tax avoidance, it is obvious that the director of a local tax office imposed the judgment below on the executive or employee by applying Article 32-2 (1) of the former Inheritance Tax Act, notwithstanding the fact that the company entrusted the ownership of the land to the executive or employee without the avoidance of gift tax.

1. On the first, second, and third grounds for appeal

The provisions of Article 32-2(1) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990; hereinafter the same) are interpreted to apply to a case where a gift tax is avoided by pretending that a title trust is a mere title trust while seeking to transfer a real ownership from a real owner in property that requires registration, etc. for the transfer or exercise of a right (see, e.g., Supreme Court Decisions 90Nu9322, Mar. 27, 1991; 91Nu1868, May 28, 1991; 94Da53631, Oct. 11, 1996).

However, according to the facts duly established by the court below, the non-party 1 corporation, the mother company of the Hando Group (hereinafter referred to as the " Hando") and the non-party 11 corporation, its subsidiary company (hereinafter referred to as the " Hando Steel") purchased the land in this case and completed the registration of ownership transfer under the name of the plaintiffs, who are its executives, is aimed at avoiding restrictions on the approval of the Seoul Special Metropolitan City's business plan, not to avoid gift tax, but at facilitating the land necessary for the business plan. Thus, the decision of the court below to the same purport is just, and there is a serious defect in the tax disposition in this case where the plaintiff is deemed to have donated the land in this case from Hando and Hando Steel, and imposing gift tax, etc. on the plaintiffs. The grounds for appeal on this point are not acceptable. It is not acceptable to accept all the grounds for appeal.

2. On the fourth ground for appeal

A. According to the reasoning of the lower judgment, the lower court recognized the following facts based on the evidence adopted in its judgment.

On February 2, 1988, Hanyang Steel Co., Ltd., the mother company of the Hanyang Group and its subsidiary company acquired the land of the Hanyang-dong, Suwon-dong and Hanwon-dong, Seoul, and transferred it to 24 workplace housing associations, including the non-party-party investment trust and workplace housing association, and established a business plan with the content that the said workplace housing association and joint project undertakers will build apartment complexes for the members of 3,360 households. Around that time, the Seoul Special Metropolitan City prepared the housing site first and transferred it to the housing association, and then the housing association and joint project owner will actually take the form of recruitment, so it is likely that the housing project owner would actually take the form of recruitment sale, and thereafter, the housing association shall acquire the housing site from a specific housing construction project owner, and thereafter, the business owner shall not be recognized as joint project undertakers, and notified the Korea Housing Association of its purport on February 29, 1988.

In order to avoid restrictions on the approval of the project plan as above in Seoul Special Metropolitan City, and to facilitate the land necessary for the above project plan, Han Han and Han Han Steel shall acquire the land necessary for the above housing project in the name of its officers and employees, and from June 198 to October 1989, the land used for the above apartment construction site was purchased in their own funds between the above apartment construction site from June 1, 198 to October 198. As to the land purchased, the land listed in attached Table 1 of the real estate list in the judgment of the court below was entrusted to the plaintiff Lee Jong-soo who was in the vice president of Han Han-soo at the time of the decision of the court below, and each registration of ownership transfer was completed in the future of the plaintiffs, and on November 6, 1989, the above land was sold to the above workplace and completed the registration of ownership transfer among the above housing associations on December 20, 198.

The Korea Steel and the Korea Steel Corporation: (a) entered the purchase price in the company’s account books as well as introduction fees, registration expenses, acquisition tax, etc. into the company’s fixed assets; (b) deposited the instant land into the company after selling it to the said association; (c) filed a voluntary declaration of the tax base of special surtax pursuant to the transfer of the instant land in the company’s name in 190; and (d) entered the details thereof in the company’s account books. Since May 190, the National Tax Service conducted an investigation into the real estate owned by the Korea Steel Group for about two months from the end of May 199, and the Korea Steel Corporation, to which the Korea Steel Corporation belongs. In the process, it was recognized that the real estate was actually purchased in the name of the Plaintiffs, not the Korea Steel Corporation, and that the transfer registration was inevitably made in the name of the Seoul District Tax Office with respect to the pertinent land; and (c) pursuant to the Seoul District Tax Office’s official instructions and guidelines for taxation evasion of gift tax on the instant real estate under its name.

However, Non-party 1, who was a director in charge of the accounting of Han River, presented both the National Tax Service, Seoul Regional Tax Office, and Manchina, etc., as data on the details and purpose of the purchase, sale, transfer registration of the land of this case, and submitted a trade contract (No. 16-1 through 4), a certified copy of the registry (No. 22-1 through 4 of the evidence No. 22-10 of the evidence No. 5, No. 11-1 through 4 of the evidence No. 10 of the evidence No. 11, No. 12-1 through 5 of the evidence No. 12), and special surtax report (No. 12-6 of the evidence No. 12-1 of the above), along with the officers or practitioners of Han River Group, and submitted a tax investigation by the above taxation authorities, and the reasons for the transfer registration was completed in the name of the plaintiffs, as seen above, and the reasons for the transfer registration of ownership of the above land was not made under the plaintiffs’ title No. 2 of the above taxation guidelines.3.

B. The lower court determined based on the foregoing findings of fact as follows.

In order for the taxation disposition to be null and void as a matter of course, the defect of the disposition is in violation of the relevant laws and regulations and should be objectively apparent. However, the taxation disposition in this case, which the defendant applied the provisions of Article 32-2 (1) of the former Inheritance Tax Act to the title trust of this case, is serious as seen above, and the purport of the registration of ownership transfer in the name of the plaintiffs is to avoid the administrative regulation of the Seoul Special Metropolitan City, and it is only to say that the registration of ownership transfer was made in the name of the plaintiffs with respect to the land of this case, which is owned by Han-do Steel and Han-do Steel in light of the above recognized facts (it does not meet the taxation requirement of deemed donation) or could have been easily known ( therefore, it is obvious that there is any defect in violation of the provisions of the above Inheritance Tax Act in relation to the taxation office that can easily know the process of acquiring the taxation disposition as above, and thus, it

C. However, in a case where there are objective circumstances to mislead a person who does not have any legal relation or factual relation (income or act) which is subject to taxation, the defect is grave and obvious, but in a case where there is a certain legal relation or factual relation which is not subject to taxation, and it can only be clarified whether it is subject to taxation or not, if it is possible to accurately investigate the factual relation, it cannot be said that it is apparent even if the defect is serious, and thus, it cannot be deemed that the taxation disposition that misleads the person about the fact subject to taxation is null and void automatically (see, e.g., Supreme Court Decisions 81Nu69, Oct. 26, 1982; 90Meu10862, Nov. 27, 1990; 94Da53631, Oct. 11, 1996).

However, as determined by the court below, if the non-party company actually purchased the land in this case and completed the registration of ownership transfer in the name of the plaintiffs with respect to the above land, it shall be deemed that the non-party company could have made an objective reason to deem that the non-party company donated the above land to the plaintiffs. However, as to the above land purchased by the non-party company, it can only be found that the facts should be examined whether the non-party company entrusted the ownership of the land in this case to the plaintiffs due to unavoidable circumstances to avoid any restriction under the positive law or to avoid the refusal of cooperation by the land owners without such a purpose. Furthermore, at the time of the imposition of the gift tax in this case, it is obvious that the non-party company's taxation purpose of Article 32-2 (1) of the former Inheritance Tax Act is limited to the purpose of avoidance of the gift tax or to include the purpose of avoidance of other taxes (see, e.g., Supreme Court Decision 9Da1631, May 16, 2005).

Nevertheless, the lower court did not err by misapprehending the legal doctrine on the invalidation of the taxation disposition, inasmuch as it objectively apparent that there was a defect at the time of the instant taxation disposition, and thus, the said disposition was null and void. The ground of appeal assigning this error is with merit.

3. Therefore, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition with the assent of all participating Justices.

Justices Park Jong-chul (Presiding Justice)