Cho Jae-chul2010 Before 2070 ( November 08, 2010)

It is recognized that there is an inevitable reason not used for a direct public project.

Although a nonprofit corporation is deemed not to be used for its proper purpose business even after three years have elapsed from the date of donation of forests and fields, it is recognized that there is an inevitable reason not to use them directly for public interest business, and thus, the imposition of gift tax based on non-use is illegal

Article 38(3) of the Enforcement Decree of the former Inheritance Tax and Gift Tax Act

Article 48(2) of the former Inheritance Tax and Gift Tax Act

2011Guhap473 Revocation of Disposition of Imposition of Gift Tax

Dok-gu, an incorporated association Dok-won

○○ Head of tax office

May 18, 2011

June 08, 2011

1. The Defendant’s disposition of imposition of gift tax of KRW 572,242,160 against the Plaintiff on April 9, 2010 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On November 5, 2003, the Plaintiff is a non-profit corporation established with the purpose of its business, such as pre-paid educational activities, pre-paid training center, social welfare activities, and activities, etc.

B. On November 20, 2003, the Plaintiff donated Do EE-1 Forest Land, 5-1 Forest Land, 342,810 square meters (hereinafter “the instant forest”) within the development-restricted zone from the KimB on the donation of the instant forest, and tried to utilize the instant forest land for the project to restore the site and construct temple buildings, etc., but due to the above regulation under the Urban Planning Act on the instant forest land, it was impossible to use the instant forest land in accordance with the said plan. The Defendant deemed that the instant forest land, which is the property contributed to the public interest corporation, is not used for the direct public interest project, etc. within three years from the date the Plaintiff was contributed, and on April 9, 2010, the Plaintiff imposed the gift tax of 572,242,160 won (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on June 11, 2010, but the Tax Tribunal dismissed the appeal on November 8, 2010.

[Ground of recognition] Facts without dispute, Gap 1 through 5 evidence, Eul 1 evidence, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

1) The plaintiff uses the forest of this case for "the proper purpose business of the plaintiff".

(ii) Even if the Plaintiff did not use the forest of this case for its proper purpose business, it is due to the inevitable reasons under the law or administration of Article 38(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621 of Feb. 22, 2008, hereinafter referred to as the "Enforcement Decree of the Act").

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Determination on the Plaintiff’s first argument

Article 48(2)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007; hereinafter referred to as the "Act") provides that where the property contributed by a public-service corporation, etc. is not used for a direct public-service project, etc. within three years from the date of receiving the property contributed by such public-service corporation, etc., gift tax shall be levied immediately on such property. The term "use of the property contributed for a direct public-service project, etc." is used directly for the relevant public-service corporation's business. It should be objectively determined on the basis of the actual use relationship, taking into account the purpose of its business and purpose

In full view of these legal principles, the Plaintiff’s testimony and arguments as to this case’s health zone, Gap’s evidence Nos. 6 through 8 (including additional numbers) and the overall purport of testimony and arguments by the witness leF from 2004 referred to as the “salma”. From the forest of this case, the Plaintiff may recognize the fact that the Plaintiff directly used the forest of this case to be used by the general public as well as the religious convenience facilities of this case by setting up three to six times a year from the forest of this case’s general Buddhist attitudes and new family members, general law company, and witness leaders, and setting up one-half a year from the forest of this case’s general public. However, according to the purport of the statement Nos. 2 and witness testimony and oral argument by the witness, it is difficult to recognize the fact that the forest of this case was installed in the forest of this case’s proper purpose facilities of this case’s use as the forest of this case’s forest of this case’s case’s use as the forest of this case’s specific purpose.

Therefore, the plaintiff's first argument is without merit.

2) Judgment on the second argument by the Plaintiff

Article 48 (2) 1 of the Enforcement Decree of the Act provides that where the property contributed by a public-service corporation is not used for the public-service business within three years from the date of receiving the contribution of the property, gift tax shall be imposed immediately on such property. The proviso provides that it shall be excluded from the subject of gift tax in extenuating circumstances prescribed by the Presidential Decree, such as requiring a long-term use of the property. Accordingly, Article 38 (3) of the Enforcement Decree of the Act provides that where it is difficult for the competent Minister (including a delegated person) to use the donated property within three years from the date of direct use for public-service business due to statutory or administrative inevitable reasons, it shall be deemed that it is difficult for the donee to use the donated property within three years from the date of approval by the competent Minister (including a person delegated with authority). Since the language and content of Article 38 (3) of the Enforcement Decree of the Act provides that it is sufficient that the donee would be exempt from the taxation of gift tax in light of the objective reason that the donee would not be subject to gift tax in advance.

On the premise of these legal principles, as seen earlier, the forest of this case was not used for its proper purpose business even after the lapse of three years from the date the Plaintiff donated the forest of this case. However, according to the evidence No. 9-1 and No. 2 of this case, it is necessary for the Plaintiff to use the forest of this case for its proper purpose business because it is impossible for the Plaintiff to construct the forest of this case, such as temple or training place, in accordance with the restrictions on activities within development-restricted zones stipulated in the Act on Special Measures for Designation and Management of Development Restriction Zones, due to the relation between the forest of this case to which the forest of this case was located within the development-restricted zones. The Daejeon Metropolitan City Mayor delegated with the authority of the competent Minister (Minister of Culture, Sports and Tourism) with respect to the Plaintiff’s civil petition about whether the forest of this case can be permitted to use the forest of this case for its proper purpose business; and the answer to the Daejeon Metropolitan City Mayor constitutes a case where the Plaintiff did not directly recognize that the forest of this case was not used for the public interest business.

Therefore, the plaintiff's second argument is justified.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by the assent of all participating Justices.