Seoul High Court 2011Nu7757 ( November 04, 2011)

Seocho 209west 1628 ( November 25, 2009)

No transaction example of a comparable apartment shall be deemed as the market price.

The general transaction value was formed at a price lower than that of the comparable apartment, and it is judged that there was a significant price fluctuation until the date of the transaction of the comparable apartment, which cannot be deemed the market price. This is erroneous in the misapprehension of legal principles as to the market price of inherited property to determine the taxable value of inherited property

2011Du30038 Revocation of Disposition of Revocation of Inheritance Tax Imposition

XX

Head of Yongsan Tax Office

Seoul High Court Decision 2011Nu7757 Decided November 4, 2011

April 26, 2012

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. According to the reasoning of the judgment of the court below and the judgment of the court of first instance as cited by the court below, the court below determined that the sales price of the apartment house compared to the apartment house of this case can be seen as the market price of the apartment of this case, since the apartment house of this case was in the same Dong, its exclusive area and its standard market price are equal, and there is no big difference between view and its exclusive area, within six months after the date of commencing the inheritance.

B. However, we cannot accept the above judgment of the court below for the following reasons.

1) The main text of Article 60(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as the "Act") provides that the value of the property on which the inheritance tax is levied shall be calculated based on the market value as of the date on which the inheritance commences. Paragraph (2) of the same Article provides that "the market value under the provisions of paragraph (1) shall be the value which is generally recognized as normal in the event of free transactions between many and unspecified persons, and shall include the value which is recognized as the market value under the conditions as prescribed by the Presidential Decree, such as expropriation, public sale price, appraisal price, etc." In addition, Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 19333, Feb. 9, 2006; hereinafter referred to as the "Enforcement Decree") provides that the transaction value (title 1) of the relevant property is identical or similar to that of the relevant property in applying paragraph (1).

As above, Article 60(1) of the Act declares the principle of market price in the evaluation of inherited property. Paragraph (2) provides for an approximate standard that can be recognized as the market price on the premise that the market price is formed through general and normal transactions, and that it should reflect an objective exchange value appropriately, and delegates specific scope to Presidential Decree. Therefore, applying Article 49(5) and (1)1 of the Enforcement Decree according to delegation, in order to determine the transaction value of similar property generated within six months before and after the commencement of inheritance as the market price of inherited property, in order to regard the transaction value of similar property generated within six months before and after the commencement of inheritance as the market price of inherited property, there is no price change between the commencement of inheritance and the transaction date of similar property at the time of commencement of inheritance (see Supreme Court Decision 200

2) According to the evidence and the record duly adopted, with respect to an apartment with the same area in the complex where the apartment in this case was located, the average price, which is the average price of the apartment generally traded as of September 2005, to which the date of commencing the inheritance belongs, is 1.4 billion won. The average price of the apartment in this case, which is the average price, is 1.4 billion won, is 1.4 billion won. The average price as of March 2006, which belongs to the day of the apartment transaction in this case, is 1.45 billion won, the average price is 1.65 billion won, and the average price is 1.65 billion won, and the standard market price of the apartment in this case as of May 2, 2005, was considerably compared with the average price of the apartment in this case as of April 28, 2006, which is 784 billion won per year, 7.6 billion won per year before the commencement of the inheritance.

3) In full view of the average trading price or the change in the standard market price, the difference between the sales price and the sales price subject to the comparison, the period between the commencing date of inheritance and the trading date of similar trading cases, etc. indicated in the above facts, it is reasonable to deem that there was a price change between September 21, 2005, which was the starting date of inheritance, and March 14, 2006, which was the day of the apartment sales contract subject to comparison, the sales price of the apartment subject to comparison in the instant case, cannot be deemed as the market price

4) Nevertheless, the lower court determined that the sales price of the apartment subject to comparison of this case constitutes the market price of the apartment of this case. It erred by misapprehending the legal principles as to the market price of the inherited property for determining the taxable value of inherited property, thereby adversely affecting the conclusion of the judgment. The ground of appeal

2. Regarding ground of appeal No. 2

According to the reasoning of the judgment of the court below and the judgment of the court of first instance cited by the court below, the court below determined that it is difficult to view that the share in the apartment of this case was owned by Lee, the husband of the plaintiff at the time of commencement

In light of the records, the above judgment of the court below is just, and there is no error of exceeding the bounds of the principle of free evaluation of evidence as alleged in the grounds of appeal, or of misapprehending the legal principles

3. As to the third ground for appeal

The amount of an inheritee’s obligation to be deducted from the value of inherited property refers to the amount of obligation deemed certain to be performed by the decedent, which is ultimately borne by him/her, as of the commencement date of inheritance, and such reason belongs to a special reason that exceptionally affected the determination of the taxable value of inherited property. As such, the obligee’s obligation to assert and prove the existence lies in the taxpayer who contests the taxable value (see, e.g., Supreme Court Decisions 2003Du9886, Sept. 24, 2004; 2005Du5604, Nov. 15, 2007).

The lower court rejected the Plaintiff’s assertion that the Plaintiff’s obligation Nos. 2, 3, and 4 of this case should be deducted from the taxable value of inherited property on the ground that the evidence submitted by the Plaintiff alone is insufficient to recognize

Examining relevant evidence in light of the aforementioned legal principles and records, the above determination by the court below is just, and contrary to what is alleged in the grounds of appeal, there were no errors of exceeding the bounds of the principle of free evaluation of evidence against the law of logic and light.

4. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.