National Tax Service Review and Transfer 2011-0249 ( October 24, 2011)

(1) If there is a serious and clear defect in the disposition rejecting a request for correction, such defect shall be deemed null and void.

Even if the appraisal institution's objective and reasonable appraisal of the market price at the time of inheritance of real estate in the process of the previous disposition lawsuit is recognized as the market price, the rejection of the request for reduction or correction of capital gains tax is invalid because there is a defect and its defect

Article 60 of the Inheritance Tax and Gift Tax Act: Principles of Appraisal

2011Guhap3270 Reduction, Correction or Refusal of Transfer Income Tax

KimA

Head of Jinju Tax Office

December 22, 2011

February 9, 2012

1. On April 13, 201, the Defendant confirmed that the disposition of refusing the reduction or exemption of capital gains tax against the Plaintiff is null and void.

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 March 1, 2004, the Plaintiff succeeded to 29 lots of land, including the 000-0 forest 1,264m2 (hereinafter “the instant real estate”) from the her husband, the husband, and transferred the said land to the Gyeongnam-do Development Corporation on November 2, 2007, with the price of KRW 3,345,249,790 (the price for 23 lots of land, the mortgage of which is set up as follows, is KRW 3,317,59,310).

B. At the time inheritance as above, among the instant real estate at the time of inheritance, 23 parcels of the instant real estate (hereinafter “the instant piece of real estate”) and 3 parcels of real estate, including 000 00 m248 m20,000 m2, Jinju-si, the maximum debt amount, which is jointly secured, was set up as 80,000 million won. The actual claim amount of the said mortgage was KRW 560,000,000.

C. On January 31, 2008, the Plaintiff, while filing a preliminary return on the transfer income tax for the year 2007 on the instant real estate with the Defendant, deemed the value of the instant collateral real estate as KRW 702,128,527 by allocating the maximum debt amount of the instant collateral security to the Defendant according to the ratio of the publicly assessed individual land price of the instant collateral security, and the other six parcels calculated the acquisition value of the instant real estate according to the publicly assessed individual land price.

D. However, on August 4, 2008, the Defendant calculated the acquisition value of the instant real estate by regarding the value of the instant real estate as KRW 491,232,041 by distributing the amount of the instant real estate in proportion to the actual amount of the said right to collateral security at KRW 560 million, not the highest amount of the claim, but the actual amount of the claim secured by the relevant property as of the evaluation base date, and notified the Plaintiff that he would correct the transfer income tax accrued in the year 2007 and pay additional KRW 76,303,220 (hereinafter “former Disposition”).

E. The Plaintiff filed a request for examination with the Commissioner of the National Tax Service on October 28, 2008. However, on January 18, 2009, the Plaintiff was dismissed, and on October 1, 2009, the decision of dismissal was made on October 1, 2009, Changwon District Court 2009Guhap865, but on April 21, 2010, the Defendant was revoked on the ground that the market price of the instant mortgaged real estate as of March 1, 2004, which was the commencement date of inheritance, was at least 982,59,000 won, based on the fact that the market price of the instant mortgaged real estate as of March 1, 204, which was the commencement date of inheritance, was at least 702,128,527 won, and that the Defendant was revoked on the ground that it was determined on October 1, 2010.

F. On February 15, 2011, the Plaintiff claimed that “the market price of the instant mortgaged real estate was corrected to the above KRW 982,559,000, and the excessive refund of the capital gains tax paid.” However, on April 13, 2011, the Defendant notified the Plaintiff of the result of the claim for determination (hereinafter referred to as “instant disposition”) of the tax base and tax amount, stating that “The appraised by the Busan High Court upon requesting the Plaintiff to the Korea Appraisal Corporation, is not the appraised value within six months before and after the commencement date of the inheritance tax and gift tax stipulated in Article 60 of the Inheritance Tax and Gift Tax Act, but the appraised value by two or more reliable appraisal institutions cannot be deemed the appraised value of the transferred real estate, and thus the filed tax amount cannot be refunded.”

[Ground of recognition] Facts without dispute, entry of Gap Ll or 5 evidence, purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Since the market price of the instant mortgaged real estate was appraised as KRW 982,559,00,000 in the lawsuit on the previous disposition of the instant case, the disposition of the instant case rejected by the Defendant was unlawful even though the Defendant had to revise the transfer income tax by changing the acquisition price of the instant mortgaged real estate from the above KRW 702,128,527 to the above KRW 982,559,000.

2) The instant disposition is null and void because there is a serious and apparent defect that violates the purport of the claim system for rectification and the basic principles of no taxation without law.

(b) relevant statutes;

It is as shown in the attached Form.

C. Determination

1) The plaintiff's assertion that defects exist in the disposition of this case

A) Article 162(1)5 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008) provides that the value of the property acquired by inheritance or donation shall be deemed as the date inheritance commences or the date of donation. As such, where transfer margin on inherited property is to be calculated based on the actual transaction price, separate provisions on actual transaction price at the time of acquisition are necessary. Accordingly, in the main sentence of Article 163(9) of the former Enforcement Decree of the Income Tax Act provides that “in case of inherited or donated property, the value of the property assessed under the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing inheritance or donation shall be deemed as the actual transaction price required for acquisition” (see, e.g., Supreme Court Decision 2006Du1326, Oct. 26, 2007). 200; thus, it should be deemed that the current market price of inherited or donated property is determined based on the objective market price principle.

B) Regarding the instant case, in the lawsuit (Seoul High Court Decision 2009Nu6544), K Appraisal Corporation assessed the market price of 982,559,000 won at the time of inheritance of the instant mortgaged real estate. The facts that the amount of the claim secured by the instant mortgaged real estate is 491,232,041 as seen earlier. According to the purport of Gap evidence No. 3-3 and arguments, K Appraisal Corporation selects a reasonable comparison standard at the time of the said lawsuit, taking into account the land location, shape, environment, and utilization rate, and considering the land price rate, it is reasonable to view that the value of the instant mortgaged real estate at the time of commencement of inheritance of the instant mortgaged real estate as 982,59,000 won or more (see Article 66 (1) of the former Inheritance Tax and Gift Tax Act, Article 63 (1) 1 of the Enforcement Decree of the same Act, and Article 63 (1) 1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act and Article 260 (2) of the former Enforcement Decree of the Inheritance Tax Act).

2) The Plaintiff’s assertion that the defect in the instant disposition constitutes grounds for invalidation

A) For a defective administrative disposition to be null and void as a matter of course, it must be objectively obvious that the defect is a serious violation of an essential part of the law, and in determining whether the defect is significant and obvious, it is required to examine the purpose, meaning, function, etc. of the law from a teleological perspective and to reasonably consider the specificity of the specific case itself at the same time (see Supreme Court Decision 94Nu4615 delivered on July 11, 1995).

B) As to the instant case, the Defendant, who is in charge of the litigation related to the previous disposition of this case and the litigation party to the transfer income tax correction, cannot be deemed to have been aware or to have been aware of the fact that the provisions of Article 60(2) of the former Inheritance Tax and Gift Tax Act and the subparagraphs of Article 49(1) of the Enforcement Decree of the same Act are merely an example of the representative cases that can be seen as the market price of the inherited property, and an appraisal by retroactive appraisal is recognized as the market price. Thus, the Plaintiff’s request for correction of the transfer income tax reduction in the amount of KRW 982,559,000 as the market price at the time of inheritance of the instant mortgaged real estate, and the above amount of KRW 982,59,000 as the acquisition price at the time of the Plaintiff’s request for correction of the transfer income tax reduction in the amount of capital gains tax, and thus, the Defendant rejected the Plaintiff’s request for correction of the transfer income tax reduction in the amount of capital gains tax at the time of the real property at the time of this case.

3. Conclusion

If so, the plaintiff's claim is reasonable and acceptable.