In the case of the joint construction of a building on co-owned land, if the share of one co-owner out of the deposit appropriated for the new construction fund is larger than the share of the new construction fund, whether the portion of the new construction fund is donated (negative)

If co-owners of land jointly build a new building on their co-owned land, the ownership relation of the new building is determined according to the ratio of the construction cost, and if construction costs are appropriated as rental deposit for the new building, the ratio of the construction cost is determined according to the ratio of the liability for return of rental deposit. If the above co-owners bear the liability for return of rental deposit used for the new building according to their respective ratio of shares in the rental deposit, and if the amount equivalent to the share of the co-owner B, who is a minor, exceeds the amount equivalent to the share of the building out of the acquisition fund, it shall not be deemed that the co-owners donated the amount equivalent to the share of the construction fund of the building from the co-owners

Article 34-6 of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 1996; see Article 45 of the current Inheritance Tax and Gift Tax Act); Article 41-5 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 14082, Dec. 31, 1993; see Article 34 of the current Inheritance Tax and Gift Tax Act)

[Plaintiff-Appellant] Plaintiff 1 and 1164 others (Law Firm Gong1996Sang, 1164 others, Counsel for plaintiff-appellant)

Plaintiff 1 and three others (Attorney Bae Ki-won, Counsel for the plaintiff-appellant)

Head of Dong Daegu Tax Office

Daegu High Court Decision 96Gu2720 delivered on April 3, 1997

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

1. On the first ground for appeal

Article 27 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) and Article 53 (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) provide that the date of acquisition and transfer of assets shall, in principle, be the date of liquidation of the price in principle, as to the time of acquisition and transfer of assets. It is only a special provision on the time of acquisition and transfer, which serves as the basis for calculating gains on transfer under the Income Tax Act, and it cannot be deemed as a special provision on the change in ownership of real estate, so it cannot be deemed that the change in ownership takes effect at that time (see Supreme Court Decision 86Nu744, Apr. 14, 1987).

According to the reasoning of the judgment below, the court below acknowledged the fact that the plaintiffs entered into a co-owned property partition contract with the plaintiffs 1 to own the land of this case which he shared on June 29, 1990 and the registration of ownership transfer was made accordingly, and on July 16, 199, the land of this case was registered with the plaintiff 1 on the ground of consultation on July 13, 19 of the same year in Daegu Metropolitan City. Since the land of this case was established as the sole ownership of plaintiff 1 and Daegu Metropolitan City after the agreement was made between the plaintiff 1 and the Daegu Metropolitan City as to the land of this case, and the sale price was paid with the sale price from the Daegu Metropolitan City prior to the partition of co-owned property, the sale price is eventually the land owner, and it cannot be deemed that the plaintiff 1 received the sale price equivalent to each share from the remaining plaintiffs. In light of the records and legal principles as seen above, the judgment of the court below is justified, and there is no error in the misapprehension of legal principles as alleged in the grounds of appeal.

2. On the second ground for appeal

The division of co-ownership is an exchange or sale of shares between co-owners (see, e.g., Supreme Court Decision 98Du229, Mar. 10, 1998). If co-owners divide the co-ownership according to their shares, it shall not be deemed a donation, but if a specific co-owner dividess the co-ownership in excess of his/her shares, the donation may be established unless the price is paid for the excess portion.

In the same purport, the court below is just in holding that the land No. 2 of this case for which the plaintiffs shared is owned by the plaintiff 1's sole ownership, and the land No. 1 is co-owned by the remaining plaintiffs except the above plaintiffs, and the part corresponding to the remaining plaintiffs' previous shares in the land No. 2 of the plaintiff 1 as to the land No. 1 co-owned by the plaintiff 1 is exchanged between the plaintiff 1 and the remaining plaintiffs, and only the remaining part is transferred from the plaintiff 1 to the remaining plaintiffs without compensation, and it is not erroneous in the misapprehension of legal principles or incomplete deliberation as otherwise alleged in the ground of appeal.

3. On the third ground for appeal

If co-owners of land jointly build a new building on their co-owned land, the ownership relationship of the new building shall be determined according to the ratio of the construction cost, except in extenuating circumstances, and if construction cost is appropriated as security deposit for rental deposits for the new building, the ratio of the construction cost shall be determined according to the ratio of the obligation to return security deposit (see, e.g., Supreme Court Decision 95Nu13197, Feb. 27, 1996)

In the same purport, the court below is just in holding that, inasmuch as Plaintiff 4’s share out of the security deposit exceeds the amount corresponding to Plaintiff 4’s share out of the acquisition fund of the building of this case, Plaintiff 2, Plaintiff 3, and Plaintiff 4 bears the obligation to return the security deposit used as the new construction fund of this case according to their respective shares in the building of this case, and the amount corresponding to Plaintiff 4’s share out of the security deposit exceeds the amount corresponding to Plaintiff 4’s share out of the acquisition fund of the building of this case, the amount equivalent to the new construction fund of this case’s building of this case’s cannot be deemed as a donation from Plaintiff 2.

4. Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cho Chang-hun (Presiding Justice)