A correction disposition following the review decision by the Tax Tribunal cannot be deemed to violate the principle of prohibition of disadvantageous change because the tax base and amount are reduced.

If a subsequent disposition in accordance with the purport of the re-audit decision is more unfavorable to the claimant than the original disposition, it is unlawful that the subsequent disposition exceeds the original disposition tax amount, but the correction disposition in this case does not exceed the original disposition tax amount.

Article 79 (Prohibition of Unfair Dismissal or Change of Disadvantages)

2017Guhap71674 Revocation of Disposition of Imposition of Gift Tax

OO

O Head of tax office

September 18, 2018

November 13, 2018

1. The Defendant’s disposition of imposing KRW 330,755,438 (including additional tax) on the Plaintiff on December 1, 2016, in excess of KRW 207,40,590 (including additional tax) of the total amount of KRW 330,75,438 (including additional tax) shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 60% is borne by the Plaintiff, and the remainder 40% is borne by the Defendant, respectively.

Cheong-gu Office

The Defendant’s disposition of imposing KRW 330,755,438 (including additional tax) on the Plaintiff on December 1, 2016 shall be revoked.

1. Details of the disposition;

A. A. Around February 4, 2009, the Plaintiff’s mother-friendly KimOO (hereinafter “the decedent”) was a person who newly built and owned a 5-story house on the ground of the 782-7th floor above the Seoul OOO-dong 782-7, and died on April 29, 2014, and the Plaintiff did not file a return on inheritance tax.

B. As a result of the Plaintiff’s inheritance investigation from May 24, 2016 to October 15, 2016, the head of the OO head confirmed that the decedent donated KRW 1,227,00,000,00, such as cash, to the Plaintiff as shown in attached Table 1. On December 1, 2016, the Defendant imposed gift tax of KRW 453,843,980 (attached Table 1’s total sum of KRW 458,843,980 appears to be a clerical error) on each of the above gift acts (hereinafter “instant disposition”).

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal on March 14, 2017. On June 12, 2017, the Tax Tribunal rendered a decision to the effect that the instant disposition was “reassessment of the tax base and the amount of tax according to the result of re-audit” (hereinafter referred to as “instant re-audit decision”).

D. From August 16, 2017 to September 5, 2017, the head of the OO tax office conducted a re-audit of inheritance tax. As a result, the Plaintiff received total of KRW 2,451,753,00 from the decedent as shown in the attached Table 2 from August 2008 to 2014, and from 2007 to 2014, the Plaintiff paid KRW 1,444,632,00 for the decedent as described in the same Table, and determined that the difference of KRW 1,07,121,00 for the decedent was the property donated to the decedent by the Plaintiff.

As a result, on September 26, 2017, the head of the OO tax office determined the value of donated property by deducting KRW 1,227,00,00 from KRW 219,879,00 ( KRW 1,227,00,000 - KRW 1,007,121,00) as shown in attached Table 1 attached hereto, which was originally determined and notified as shown in attached Table 3, from KRW 1,227,00,00, KRW 219,00. Specifically, the amount of donated property in 2013 shall be calculated as KRW 0,00,00, KRW 69,955, which is part of nursing expenses, from the amount donated on April 18, 2014. As a result, the gift tax was corrected as KRW 330,755,455 (including additional tax) (hereinafter referred to as “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 6, 7, 8 (including paper numbers), Eul evidence Nos. 1 and 3 (including paper numbers), the purport of the whole pleadings

2. Determination on the lawfulness of the instant disposition

A. The plaintiff's assertion

Since the instant disposition was recognized as having more than KRW 2,451,753,00,00, more than KRW 1,227,000 of the value of donated property, which is the tax base recognized in the instant disposition, the instant disposition was in violation of the principle of prohibition of disadvantageous alteration. As such, the instant disposition was in violation of Article 65(5) of the Framework Act on National Taxes, which stipulates that the amount of cash inflow (amount of donation) originally recognized in the instant re-investigation decision was the amount that the decedent donated to the Plaintiff by the decedent, thereby contrary to the recognition and determination of facts constituting the premise for the instant re-audit decision, and that the said disposition was conducted only to the extent specified in the text of the instant re-audit decision.

Even if the instant corrective disposition does not violate the principle of prohibition of disadvantageous alteration or did not violate the scope of reinvestigation, the amount borne by the Plaintiff on behalf of the decedent is KRW 1,738,00,000, and thus, the gift tax should be determined accordingly.

Therefore, the instant disposition should be revoked as it is unlawful.

B. Relevant statutes

Attached Form 6 is as shown in the attached Table 6.

C. Determination as to whether the principle of prohibition of disadvantageous alteration is violated

1) Relevant legal principles

Articles 65(1) and 81 of the Framework Act on National Taxes provide that a decision of dismissal, dismissal, revocation or correction of a disposition, or necessary disposition shall be made in the form of a decision on a request for adjudgment, and Article 79(2) of the Act provides that "The Council of Tax Judges or the Joint Session of Tax Judges shall not make any decision more disadvantageous to applicants than the disposition of request for adjudgment in making a decision under Article 65 applied mutatis mutandis under

A re-examination decision which is conducted in practice as a type of a decision on a request for a adjudgment constitutes a modified decision in which the agency's intent to wait as a part of the decision on the request for a trial, etc., by entering into the results of re-audit of the matters pointed out in the ruling of the ruling agency, and thereby becomes effective as a subsequent disposition by supplementing the contents of the subsequent disposition made by the disposition agency (see, e.g., Supreme Court en banc Decision 2007Du12514, Jun. 25, 2010). If the subsequent disposition made pursuant to the purport of the re-audit decision is more unfavorable to the claimant than the initial disposition, the part exceeding the amount of the initial disposition is unlawful (see, e.g., Supreme Court Decision 2016Du39382, Sept. 28, 2016).

2) Determination

In light of the following circumstances acknowledged by the aforementioned evidence, the correction disposition of this case cannot be deemed to violate the principle of prohibition of disadvantageous alteration. Thus, the plaintiff's above assertion is without merit.

① The instant disposition imposing gift tax is imposed by deeming that the Plaintiff donated the sum of KRW 1,227,00,000 from September 5, 2013 to April 24, 2014, as shown in attached Table 1, deeming that the Plaintiff donated the said money as donated property.

② In accordance with the purport of the instant re-audit decision, the instant disposition was determined by deducting the money that the Plaintiff assumed on behalf of the decedent from the total amount of KRW 1,227,00,000,00,000, donated from September 5, 2013 to April 24, 2014. As such, the instant disposition was calculated by deducting the amount exceeding the difference between the decedent and the money that the Plaintiff assumed on behalf of the decedent from the decedent from the total amount of KRW 1,227,00,000, from the total amount of KRW 1,227,000 to April 24, 2014, to the Plaintiff from the total amount of KRW 1,227,00,000, from the total amount of KRW 1,227,000,00,000, the entire donated property on September 27, 2013, and the entire donated property on April 18, 2014.

③ Meanwhile, the Tax Tribunal calculated the total amount of donation through an investigation on the amount of cash inflows, etc. of a decedent for whom the location of use is not verified, based on the following: (a) the reason for the determination (No. 6-2, 11, 12, 13 pages) states that “The amount of cash inflows (2,19 million won) of the decedent for whom the status of use is unclear is determined.” In light of the fact that only KRW 1,227 million was donated in advance; (b) the amount of cash inflows, etc. of the decedent for whom the status of use is not verified is determined by the Tax Tribunal; (c) the disposition authority determines that it is reasonable to rectify the tax base and tax amount of this disposition according to the outcome of the assessment.” This is also difficult to conclude that the amount of cash inflows from the decedent to the Plaintiff at the time of the disposition of this case, as alleged by the Plaintiff, cannot be deemed to constitute a re-investigation other than the Plaintiff’s tax Tribunal’s assertion that the amount should be further specified.

④ Accordingly, in the instant corrective disposition, the value of donated property was recognized as KRW 1,007,00,000 in total, and the amount of the corrected tax is KRW 330,755,455, which is smaller than KRW 453,843,980 in the instant disposition.

⑤ Therefore, the instant disposition is not deemed to be more unfavorable than the instant disposition, since the value of donated property is recognized as larger than the amount of KRW 1,227,00,000, which was recognized in the instant disposition.

D. Determination as to whether the scope of reinvestigation exceeds the scope of reinvestigation

1) Relevant legal principles

Where a decision of reinvestigation has been made, the disposition agency shall investigate only the scope stated in the written decision within 60 days from the date of decision of reinvestigation, and revoke or correct it or take necessary measures according to the results thereof (see Article 65 (5) of the Framework Act on National Taxes)

In addition, the disposition authority should be deemed to be able to conduct a reinvestigation according to the purport of the re-audit decision and make a subsequent disposition supplementing the content thereof. Therefore, it would be against the binding force of the re-audit decision that the disposition authority maintains the initial disposition contrary to the judgment on the specific reason for disposition (see, e.g., Supreme Court Decision 2015Du37549, May 11, 2017).

2) Determination

According to Gap evidence 6-2, the re-audit decision of this case does not specify the amount as seen in the above 2.c. 2. 2) and 2.C. 3) and the purport that the amount of money between the decedent and the money borne by the plaintiff for the decedent shall be determined by re-determination of the property and the tax base and tax amount. The order and the reasons are the requisite facts, and it cannot be deemed that the amount of money between the decedent and the plaintiff was determined as KRW 2,191,00,000 from the decedent, and there is no evidence that the re-audit decision of this case exceeded the scope of the main text of the re-audit decision of this case, or contrary to the purport of the facts constituting the text and premise of the re-audit decision of this case.

Therefore, the plaintiff's assertion on this part is without merit.

(e) Calculation of amounts to be deducted from donated property;

1) The value of the decedent’s property and the money transferred to the account;

Comprehensively taking account of the purport of the entire pleadings, the Plaintiff’s payment of KRW 15,156,00 to the inheritee’s account from around 2011 to August 201, 201, and paid KRW 95,290,000 in total through the inheritee’s account from around 2008 to 2013.

Therefore, it is reasonable to determine that the sum of KRW 110,00,000 (15,156,000 +95,290,000 + the sum of KRW 15,290,000) is the amount borne by the Plaintiff for the decedent.

(ii)the cost of lighting the old building;

The plaintiff asserts that the sum of KRW 617,00,000 was paid for the deceased's life-sustaining expenses.

In full view of the aforementioned evidence, Gap evidence Nos. 15, 16, 17, and 18-1, 19, the whole purport of the pleadings is as follows: the building of this case was removed and constructed after the removal of the existing building; however, it can be acknowledged that the plaintiff bears the lease deposit paid to the tenants who had resided in the existing building, such as the statement of "cost for the specification of the old building" for the decedent, and the consulting fee paid in the process.

Therefore, the sum of the above KRW 617,00,000 should be deducted from the money donated by the Plaintiff.

(iii) Building costs;

The plaintiff asserts that construction cost of KRW 734,000,000 was paid for the decedent.

In full view of the overall purport of the arguments in the statement Nos. 10, 11-1 through 3, 16, and 18-1, 21-1, 2, and 22 of the evidence, the fact that the plaintiff bears construction costs, such as the statement of construction costs, in order to construct the building of this case owned by the decedent.

Therefore, the sum of the above KRW 734,000,000 should be deducted from the money donated by the Plaintiff.

(iv) nursing expenses;

The plaintiff asserts that the sum of KRW 143,000,000 (bees less than KRW 143,000) was disbursed as nursing expenses, as shown in the attached Table 4, for the decedent.

In full view of the overall purport of the pleadings, evidence Nos. 17, 18-1, 19, 20-1 through 3, 23, 24, and 25 of the evidence Nos. 17, 18-1, 19, and 20-1 through 3, 23, 24, and 25 of the evidence Nos. 17, the Plaintiff may recognize for the inheritee the fact that the Plaintiff paid nursing expenses from 2005 to 27, 78, 79, 87, and 88 of the attached Table 4's "sick expenses" (143,089, 493 - 2,00,000 won - 2,300,000 won - 1,938,000 won - 2,00 won in the attached Table No. 4's statement).

However, with respect to the above table 27, the Plaintiff paid 2,00,000 won to OO on March 9, 2012, and submitted 200,000 won for nursing expenses from this XX account as evidence. However, the person subject to the above statement of transactions is indicated as 'OO', not OO', and the above table 26 is deemed to have already been paid for the pertinent period of time on March 3, 2012. According to the above table 27-2,00,00,000 won for nursing expenses to O, the Plaintiff cannot deduct 27-7,00,000,000 won for nursing expenses from 80,000,000 won for 30,000,000 won for each of the above accounts that was donated to O's nursing expenses on March 3, 2012, 300,000 won for 200,000 O's 30,000,00.

Therefore, the above KRW 132,00,000 (turf less than million according to the Plaintiff’s intent) should be deducted from the donated money.

5) Repair expenses

The plaintiff asserts that 30,000,000 won was paid at the repair cost of the building of this case for the decedent.

In full view of the purport of the entire pleadings in the statements No. 18-2, No. 26-1, and No. 26-2, the Plaintiff may recognize the fact that the Plaintiff paid MaO a total of KRW 30,000,000 (be less than KRW 30,000) with the repair cost of the building of this case, as shown in the attached Table 4’s repair cost, through MaO.

Therefore, the sum of KRW 30,000,000 should be deducted from the amount donated by the Plaintiff.

6) Management expenses

The plaintiff asserts that the plaintiff paid KRW 104,000,000 to the management expenses of the building of this case for the decedent.

Comprehensively taking account of the overall purport of the pleadings in the evidence Nos. 18-1 and 19, the Plaintiff may recognize the fact that the Plaintiff paid the aggregate of KRW 104,262,340 as management expenses, such as public charges, etc. of the instant building, as indicated in the attached Table 4.

Therefore, the sum of the above sum of KRW 104,00,000 (turf less than KRW 100,000) should be deducted from the amount donated by the Plaintiff.

7) Sub-determination

Therefore, the sum of KRW 1,727,00,000 ( KRW 110,00,000 + KRW 617,000,000 + KRW 734,00,000 + + KRW 132,00,000 + + KRW 30,000,000 + KRW 104,00,000) should be deducted from the donated money.

(f) Determination of property of gift tax;

Therefore, the Plaintiff’s money to be deducted from KRW 1,227,00,000 as a donation from the inheritee is 502,247,00 [1,227,00,000 - (2,451,753,000 - 1,727,000].

502,247,00 won of the above money is deducted from 352,247,000 won (502,247,000 won - 20,000 won - 100,000 won - 100,000 won) among the donated property as of September 5, 2013 of attached Table 1, the entire donated property as of September 27, 2013, and October 15, 2013, and 352,247,000 won (502,247,000,000 won - 100,000,000 won) out of the donated property as of April 18, 2014; the donated property as stated in attached Table 5’s "value of donated property (final)"; and the gift tax as of this, is as stated in “Gift” of the same Table.

G. Sub-determination

Therefore, the portion exceeding KRW 207,400,590 among the disposition of this case should be revoked as it is unlawful.

3. Conclusion

Therefore, the plaintiff's claim is justified within the above scope of recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.