In case where additional shares are acquired and registered in the name of a person on the register of shareholders, whether it can be deemed that there is no purpose to avoid gift tax in the title trust solely on the ground that there is a possibility that the person may claim external stockholding or transfer price to the tax office, etc. in the future pursuant to Article 34

Article 32-2 (1) of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 1990) does not apply to the case where there is no purpose to avoid gift tax by concealing donations from the actual owner and the nominal owner of the property requiring registration, etc. to the different persons. Thus, in a case where the Plaintiff acquired shares additionally and registered only in the name of the Plaintiff on the register of shareholders, and the Plaintiff asserted that there was no purpose to avoid gift tax by concealing donations in the name of the actual owner and the nominal owner, the court should examine the Plaintiff’s proof, and then determine the legitimacy of the assertion. The court should determine whether the Plaintiff’s assertion was justifiable, on the sole basis of Article 34 of the Inheritance Tax Act, that there is a possibility for the Plaintiff to externally assert the ownership or transfer price of shares at the tax office, etc. in fact, without examining the Plaintiff’s proof.

Article 32-2(1) of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 1990)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jae-soo and 1 other, Counsel for plaintiff-appellant)

[Judgment of the court below]

The director of the tax office

Seoul High Court Decision 91Gu25064 delivered on November 12, 1992

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

The grounds of appeal are examined.

1. On the first ground for appeal

In light of the records, the court below's rejection of the plaintiff's assertion that the non-party, his father, acquired the shares of this case and registered them in the name of the plaintiff on the register of shareholders, was arbitrarily done without communication with the plaintiff, is justified, and there is no error of misconception of facts or violation of the rules of evidence, such as the theory of lawsuit, etc.

2. On the second ground for appeal

According to the reasoning of the judgment below, the court below held that the disposition of this case, where the plaintiff deemed the above non-party's child to be a gift pursuant to Article 32-2 (1) of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 1990), was legitimate, on the ground that the above non-party's act of title trust in this case is not a purpose of evading gift tax, on the ground that the above non-party's act of title trust in this case is not a purpose of evading gift tax, and thus, the disposition of this case, which the plaintiff deemed to be a gift pursuant to Article 32-2 (1) of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 199).

However, Article 32-2 (1) of the former Inheritance Tax Act is a view established by a party member that no application shall be made in the event that there is no purpose to avoid gift tax by concealing donations from the actual owner and the nominal owner in the property requiring registration. In this case, the Plaintiff asserted that the Plaintiff had no purpose to avoid gift tax by concealing donations in the name of the Plaintiff only on the register of shareholders after the Plaintiff’s father acquired the Plaintiff’s father and registered the shares in the name of the Plaintiff, and that there was no intention to avoid gift tax by concealing donations in the name of the actual owner or the nominal owner. However, the lower court should have determined the legitimacy of the assertion after examining the Plaintiff’s proof, notwithstanding Article 34 of the former Inheritance Tax Act, it is possible for the Plaintiff to externally assert the holding or transfer of the shares at the tax office, etc. in the future, etc. on the sole basis of the fact that it is possible for the Plaintiff to assert that there is no purpose to avoid gift tax without examining the Plaintiff’s proof. This is with merit.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jae-soo (Presiding Justice)