Whether a unit agricultural cooperative constitutes a financial institution prescribed by Presidential Decree under Article 29-4(2) of the Inheritance Tax Act (negative)

In light of the principle of no taxation without the law, the interpretation of tax laws and regulations must be strict, and it cannot be extensively interpreted or analogically interpreted, and comprehensively considering Articles 58 and 153 of the Agricultural Cooperatives Act, and Article 3 of the Banking Act, as a credit business, a unit agricultural cooperative is limited to the lending of deposits and installment savings to non-members, unlike the National Agricultural Cooperative Federation that can engage in the business of receiving and lending deposits and installment savings from non-members, it cannot be viewed as an example of the provision of the National Agricultural Cooperative Federation under Article 37-2 subparagraph 14 of the Enforcement Decree of the Corporate Tax Act or a unit agricultural cooperative cannot be viewed as including a unit agricultural cooperative.

Article 29-4 (2) of the Inheritance Tax Act; Article 40-5 of the Enforcement Decree of the Inheritance Tax Act; Article 37-2 subparagraph 14 of the Enforcement Decree of the Corporate Tax

[Judgment of the court below]

Head of the tax office

Seoul High Court Decision 87Gu913 delivered on December 3, 1988

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal No. 2 are examined.

Article 29-4 (2) of the Inheritance Tax Act provides that the amount of debts shall not be deducted from the donated property even in cases where the donee takes over the debts of the donor: Provided, That this shall not apply to cases where the donee, who is objectively deemed capable of paying debts in view of occupation, sex, age, income, property status, etc., takes over the debts of the State, local autonomous organizations and other financial institutions prescribed by the Presidential Decree or judicial confirmations, etc., and Article 29-4 (2) of the Enforcement Decree of the same Act provides that the term "financial institutions, etc. prescribed by the Presidential Decree" in Article 40-5 of the same Act means corporations falling under each subparagraph of Article 37-2 of the Enforcement Decree of the Corporate Tax Act and securities companies under the Securities and Exchange Act. Article 37-2 (1

Article 29-4 (2) of the Inheritance Tax Act and the proviso of Article 29-4 (2) of the same Act shall be deemed to be a formal donation between a spouse, a lineal ascendant or descendant or a descendant, and in substance, most of the cases where the gift tax is evaded, and in principle, the amount of the obligation to be received through an onerous donation among the above persons shall not be deducted from the value of the donated property. However, in the case where the obligation due to a loan or a judicial final and conclusive obligation is taken over by an institution as provided in the proviso of the same Act, the existence of the obligation is recognized objectively and officially, and thus there is no concern about tax evasion even after deducting the amount of the obligation to be received. Meanwhile, in light of the fact that the agricultural cooperatives listed in the Enforcement Decree of the above Corporate Tax Act carry out the credit business such as the National Agricultural Cooperative Federation under the inspection by the Board of Audit and Inspection, it is deemed to be included in the National Agricultural Cooperative Federation, or that the obligation due to a loan of a unit agricultural cooperative shall be deducted from the value of the inherited property.

However, even if the purport of the proviso of Article 29-4(2) of the Inheritance Tax and Gift Tax Act is the same as the original adjudication, the interpretation of the tax law should be strict, and the expanded interpretation or analogical interpretation shall not be permitted without permission. Meanwhile, in full view of the provisions of Articles 58 and 153 of the Agricultural Cooperatives Act and Article 3 of the Banking Act, as a unit agricultural cooperative is limited only to the income of deposits and installment savings from union members and loans to union members, the unit agricultural cooperative is separate from the National Agricultural Cooperative Federation that can carry on the income of deposits and installment savings as well as loans from union members, and considering that the unit agricultural cooperative is not a financial institution prescribed by the Banking Act, it shall not be deemed as an example of the National Agricultural Cooperative Federation prescribed in Article 37-2 subparag. 14 of the Enforcement Decree of the Corporate Tax Act or a unit agricultural cooperative shall not be deemed to include a unit agricultural cooperative.

Ultimately, the court below erred by misapprehending the legal principles on the scope of financial institutions, etc. as stipulated in Article 40-5 of the Enforcement Decree of the Inheritance Tax Act, and the ground for appeal assigning this error is with merit.

Therefore, without determining the remaining grounds of appeal by the defendant, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition.

Justices Park Yong-dong (Presiding Justice)