Cho High Court Decision 201Do3169 ( November 23, 2011)

In special circumstances, deposit funds shall not be deemed a donation in advance.

Inasmuch as the deposit is found to have been withdrawn and deposited in the account in the name of the taxpayer, the deposit is presumed to have been donated to the taxpayer; however, considering that some of the funds are consistent with the amount withdrawn and deposited to the unit, the date and time of withdrawal and deposited are the same, and account transfer should not be deemed to have been made in advance due to the nature of the fund account, etc.

2012Revocation of disposition of revocation of imposition of gift tax

XX

head of Sung Dong Tax Office

June 20, 2012

July 13, 2012

1. The Defendant’s imposition of gift tax of KRW 000 against the Plaintiff on August 1, 201, in excess of KRW 000, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. One-third of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The Defendant’s disposition of imposing gift tax of KRW 000 against the Plaintiff on August 1, 2011 shall be revoked.

1. Details of the disposition;

A. On April 16, 2002, according to the recommendation of thisA, the Plaintiff purchased the apartment house in Seongdong-gu Seoul, which is scheduled to be reconstructed on April 16, 2002, and delegated management to thisA.

B. On January 27, 2003, thisA opened an account under the Plaintiff’s name (hereinafter “this case’s account”) at the place XX Dong branch of the Japanese bank, Inc. on January 27, 2003, and received a deposit of KRW 000,000,000,000,000 from the AA bank.

C. On September 21, 2007, the Plaintiff’s father, the Plaintiff’s father, transferred KRW 000 from his own account to the instant account, and repaid the loans under the Plaintiff’s name. On April 11, 201, the Plaintiff died.

D. On August 1, 2011, the Defendant imposed KRW 000,000 on the Plaintiff on the ground that “The presentB has made a prior donation of the amount of subrogated amount by subrogation of the Plaintiff’s loan by means of a subrogation (hereinafter “instant disposition”).

E. The Plaintiff filed an appeal seeking the revocation of the instant disposition on August 22, 2011, but was dismissed by the Tax Tribunal on November 23, 2011.

[Reasons for Recognition] 1, 3, 5, 7, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1,

2. Whether the instant disposition is minor;

A. The plaintiff's assertion

This AA took out a loan under the name of the Plaintiff without the Plaintiff’s permission and used the loan as the current BB’s business fund, and the present B paid the loan by transferring the loan to the account of this case. Therefore, the instant disposition based on the premise that the present BB’s subrogation was a prior donation is illegal.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) As to loans deposited into the account of this case

"The Act on Real Name Financial Transactions and Confidentiality" in cases where a deposit contract is concluded through a real name verification procedure and the facts of such contract are clearly indicated in the real name verification statement, etc., it would normally be reasonable to interpret the deposit title holder or its agent as the party to the deposit contract in the deposit contract and to clarify the legal relationship as to the party to the deposit contract. In addition, such legal principles as to the interpretation of the party to the deposit contract should apply to all cases where the deposit title holder is present at the financial institution and entered in the deposit contract or the third party, such as the fund contributor, etc. (hereinafter referred to as the "Contributor, etc.") entered into the deposit contract as the proxy. Therefore, in order to view the deposit title holder as the party to the deposit contract the contributor, etc. other than the deposit title holder, if it is possible to regard the deposit title holder as the party to the deposit contract after undergoing a real name verification procedure, it is reasonable to recognize that the Plaintiff has the right to claim the deposit of the deposit title holder and the fund contributor, etc. in accordance with the objective evidence of the Plaintiff's deposit contract.

(2) As to the advance donation

(A) In a lawsuit seeking revocation of the disposition imposing gift tax, insofar as the deposit in the name of a donor, which is recognized as a donor by the tax authority, is revealed to have been withdrawn and deposited in the account under the taxpayer’s name, such deposit is presumed to have been donated to the taxpayer. Thus, barring special circumstances, such as withdrawal of such deposit and deposit in the taxpayer’s name, the need to prove it is the taxpayer (see Supreme Court Decision 99Du4082, Nov. 13, 2001).

(B) On September 21, 2007, the presentB transferred KRW 000 from its own account to the instant account, and thus, it is presumed that it was donated in advance in accordance with the above legal doctrine.

1. 00 won

According to the statement of No. 8 and witness evidence of this case, thisA may withdraw KRW 000 from the account of this case on July 2, 2003, recognize the fact that this was deposited into the AA investment trust securities account of the present BB on the same day, and considering the fact that the amount withdrawn and deposited is consistent with the unit of KRW 000, the date withdrawn and deposited are equal, and the account transfer is known due to the nature of the fund account, it is reasonable to view that the presentB transferred KRW 000 to the account of this case to use and repay the Plaintiff’s loan amount of KRW 00,000, and therefore, it cannot be deemed that the present B was donated in advance.

(2) As to KRW 000

When considering the testimony of the witness A in each statement of evidence Nos. 4, 5, and 6 (including the provisional number), the plaintiff was in a foreign country as shown in Table No. 1 as of the date of opening the account of this case and the deposit date of each loan, and the plaintiff was in the income as described in Table No. 2 below around the time of receiving the loan. This may be recognized that this case’s domestic business-related affairs of the presentB, which operated a leather and a high-household retail business in Hong Kong from 1980 to 1980, but the fact of such recognition alone alone is insufficient to deem that the presentB used 00 won (i.e., 00 won - 00 won). (It cannot be ruled out that it could have been used as the plaintiff’s living expenses, etc. residing in a foreign country, and there is no other evidence to support this.

The list of entry, withdrawal, and entrance fees:

(3) As to the lawful tax amount

Since the taxable value of gift tax is KRW 000, the legitimate amount of tax accordingly is KRW 000 as indicated in Table 3 below, the part of the disposition of this case which exceeds KRW 000 (not including below KRW 10 pursuant to Article 47(1) of the National Treasury Subsidy Management Act) 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.