[1] The meaning of "corporate tax and resident tax on income" under Article 5 (3) 1 of the former Enforcement Rule of the Inheritance Tax Act, which shall be deducted from liabilities in calculating the net asset value of the corporation when the supplementary evaluation of non-listed stocks, which are inherited property, is conducted

[2] In calculating the net asset value of the corporation's non-listed stocks, whether the amount equivalent to the corporate tax, etc. for the voluntary evaluation marginal profit of assets not included in the earnings until the date commencing the inheritance can be deemed as the debt to be deducted from the asset evaluation value (negative)

[3] Whether an under-reported tax amount may be imposed on under-reported tax amount due to a difference in the appraised value of inherited property under the former Inheritance Tax Act (affirmative)

[4] Whether the under-reported circumstance of the value of the inherited property constitutes a justifiable ground for exemption from additional taxes because he/she was unaware of the assessment method of the value of the inherited property or whether the corporate tax is imposed on the evaluation marginal profit

[5] Whether an additional tax can be imposed on the unpaid tax amount due to a difference in the evaluation although the inherited property was reported by the deadline for filing a return under the former Inheritance Tax Act (affirmative)

[6] Whether an amount for which an application for payment by annual installments was filed after its filing deadline due to a difference in the evaluation of inherited property under the former Inheritance Tax Act becomes subject to the imposition of additional tax (affirmative)

[1] In full view of the provisions of Article 9(1) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993), Article 5(1) and Article 5(6)1(b)(c) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993), and Article 5(3)1 of the former Enforcement Rule of the Inheritance Tax Act (amended by Ordinance of the Prime Minister No. 498 of Apr. 1, 1995) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993), in calculating the value of stocks not listed on the Stock Exchange at the time of commencement of the inheritance, the "corporate tax and resident tax on the income that are one debt to be deducted from the corporate net asset value at the time of the commencement of the inheritance refers to the corporate tax and resident tax on the income included in the appraised

[2] According to Article 9 (1) and (2) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994) and Article 12 (1) 5 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1468 of Dec. 31, 1994), "gains from the evaluation of assets, which are the difference between the book value of the corporation's assets and the market value, shall be one of the "gains from the calculation of income for each business year". However, according to Article 15 (1) 5 of the former Corporate Tax Act and Article 33 (1) of the Assets Revaluation Act (amended by Act No. 4804 of Dec. 2, 1994), "the revaluation rate of assets under the provisions of the Assets Revaluation Act" shall not be included in the gross income for the calculation of income under the provisions of the Corporate Tax Act, and it shall not be deemed that the corporate tax and special surtax under Article 9 (2) of the former Enforcement Decree of the Corporate Tax Act shall not be included in the valuation profit.

[3] According to the main sentence of Article 26(1) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993), when the head of a tax office fails to report inherited property within the reporting deadline or makes a report that falls short of the tax base to be reported, he/she shall not be exempt from the imposition of the additional tax on negligent tax returns even if the assessment of inherited property falls short of the tax base due to the difference in the assessment of inherited property under the above provisions, on the ground that the amount equivalent to 20/100 of the amount calculated by multiplying the ratio of the amount not reported or short of the tax base to be reported to the tax base determined by the government is added to the calculated tax amount of the inheritance tax.

[4] The circumstances that underreporting the value of the inherited property by failing to know whether corporate tax is imposed on the difference between the assessment method of the inherited property or the book value of the asset and the market value of the asset are merely a mere lot or misunderstanding under the law, and thus, it cannot be deemed that there is a justifiable reason to

[5] In full view of the provisions of Articles 20(1), 20-2(2), and 26(2) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993); Article 19-2(1) and (2) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1996); Article 19-2(2) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1996); Article 20(1), and Article 19-2(2) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1996); Article 20(2) of the former Inheritance Tax Act (amended by Act No. 14082 of Dec. 31, 199); and

[6] The unpaid tax amount subject to an additional payment refers to the tax amount which has not been paid within the due date or has been paid less than the due date based on the due date for filing the return. Thus, an application amount for annual payment deducted from the amount to be voluntarily paid in calculating the additional payment refers only to the amount that has been applied for annual payment by the due date for filing the inheritance tax return. Therefore, even if the tax amount was returned as inherited property but did not apply for annual payment by the due to a difference in the assessment,

[1] Article 9(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 462 of Dec. 31, 193; Article 60(1) of the current Inheritance Tax and Gift Tax Act); Article 5(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 193; Article 60(1)1(b) of the current Inheritance Tax and Gift Tax Act (see Article 54(1) of the current Inheritance Tax and Gift Tax Act); Article 5(3)1(a) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Act No. 462 of Apr. 1, 195; Article 9(1)6 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 14065, Dec. 31, 193); Article 9(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (see current Article 97(1)

[1] Supreme Court Decision 90Nu4136 delivered on January 29, 1991 (Gong1991, 891) / [4] Supreme Court Decision 93Nu20467 delivered on August 26, 1994 (Gong1994Ha, 2557), Supreme Court Decision 95Nu92 delivered on November 7, 1995 (Gong195Ha, 3941)

Plaintiff 1 and five others (Attorney Jeong Sung-sung et al., Counsel for the plaintiff-appellant)

Head of the Tax Office;

Seoul High Court Decision 95Gu16068 delivered on October 10, 1996

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. On the first ground for appeal

Article 9 (1) (main sentence) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993; hereinafter the same shall apply) provides that the value of inherited property shall be based on the current status as at the time of commencing an inheritance. Article 5 (1) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993; hereinafter the same shall apply) provides that the current status as at the time of commencing an inheritance under Article 9 (1) of the Act shall be based on the current status as at the time of commencing an inheritance, and that the current status as at the time of commencing an inheritance shall be calculated by the method under paragraphs (2) through (6) if it is difficult to calculate the market price, the appraisal of securities shall be based on subparagraph 1 (b) of the same Article. (1) provides that the net asset value of the relevant corporation / total number of shares issued / the net asset value as at the time of commencing an inheritance /the net asset value as at the time of the corporation shall be calculated by Ordinance.

However, Article 9 (1) and (2) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994; hereinafter the same) and Article 12 (1) 5 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994) stipulate that "gains from the evaluation of assets, which are the difference between the book value of the corporation's assets and the market value, shall be included in the "gross income" which is the basis of the calculation of income for each business year. However, according to Article 15 (1) 5 of the former Corporate Tax Act and Article 33 (1) of the Assets Revaluation Act (amended by Act No. 4804 of Dec. 22, 1994; hereinafter the same), it cannot be imposed corporate tax and resident tax under Article 9 (1) 5 of the former Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1999).

In the same purport, the court below is just in holding that, in calculating the value per share of the non-listed stocks of this case, which are inherited property, by the supplementary assessment methods stipulated in Article 5 (6) 1 (b) of the former Enforcement Decree of the Inheritance Tax Act, the amount equivalent to the corporate tax, etc. on the difference between the book value of the assets of the relevant corporation and the market value on the date commencing the inheritance of this case, shall not be deemed as the obligation to be deducted from the property valuation value, and there is no error of law such as misunderstanding of legal principles as to the appraisal of non-listed stocks, violation of precedents,

2. On the second ground for appeal

According to the main text of Article 26(1) of the former Inheritance Tax Act, when the head of a tax office fails to report an inherited property by the reporting deadline or makes a report that falls short of the tax base to be reported, he/she shall add an amount equivalent to 20/100 of the amount calculated by multiplying the amount of the tax base determined by the government by the calculated amount of the inheritance tax by the ratio of the amount not reported or insufficient to the tax base to be reported, to the amount of the calculated amount of the inheritance tax. "Unreported or under-reported report" only provides for the subject of the imposition of the calculated amount of the additional tax on negligent tax, and the subject of the imposition of the additional tax on negligent tax shall not be exempted from the subject of the assessment of the inherited property even if the return falls short of the tax base due to the difference in the assessment of the inherited property. The main sentence of Article 26(1) of the amended Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 193) provides that the inheritance shall not be applied for the first time after the commencement of inheritance pursuant to Articles 1 and 194.

In addition, the circumstances that underreporting the value of inherited property by failing to know whether corporate tax is imposed on the difference between the assessment method of inherited property or the book value of assets and the assessed value of the market value are merely a mere lot or misunderstanding under the law, and thus, cannot be deemed to constitute a justifiable ground (see, e.g., Supreme Court Decisions 93Nu20467, Aug. 26, 1994; 95Nu92, Nov. 7, 1995).

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to additional tax on negligent tax returns as alleged in the grounds of appeal.

3. On the third ground for appeal

Article 20(1) of the former Inheritance Tax Act provides that an inheritor shall submit a statement of amount to be deducted from a return stating the type, quantity, value, etc. of inherited property to be imposed on an inheritance tax within six months from the date on which the commencement of inheritance is known. Article 20-2(2) of the former Enforcement Decree of the Inheritance Tax Act provides that a person who submits the above return shall pay the returned tax amount after deducting the amount applied for annual installments from the reported tax amount by the due date. Article 26(2) provides that where the inheritance tax is not paid or underpaid by the due date for payment pursuant to Article 20-2(2) of the former Inheritance Tax Act, the head of a tax office shall collect the amount calculated by adding the amount of tax unpaid or underpaid, as prescribed by Presidential Decree, to the unpaid tax amount by 10/100 and 2. Article 19-2 of the former Enforcement Decree of the Inheritance Tax Act provides that an amount calculated by multiplying the rate prescribed by Presidential Decree in consideration of the interest rate of financial institutions with respect to the unpaid tax amount under subparagraphs 1 and 2 by 10/100.

In full view of the details of the relevant statutes and the fact that an additional payment for inheritance tax is an administrative sanction that leads a taxpayer to pay in good faith, ensure the performance of his/her duty to pay, and imposes financial benefits on the amount unpaid by the due date for payment, and thus, it cannot be said that even if the inherited property was reported by the due date for report, but the amount unpaid due to the difference in the assessment, it cannot be deemed that the subject of the additional payment for unfaithful payment is excluded from the subject of the imposition of the additional payment for unfaithful payment. Furthermore, such circumstance alone does not lead to justifiable grounds for paying the amount below

On the other hand, Article 28 (1) of the former Inheritance Tax Act, which provides for annual payment, provides that when the inheritance tax amount exceeds 4 million won, the head of a tax office may grant permission for annual payment upon receiving an application from the taxpayer under the conditions as prescribed by the Presidential Decree. Article 20 (1) of the former Enforcement Decree of the Inheritance Tax Act provides that a person who intends to apply for annual payment of inheritance tax shall submit an application for annual payment along with the tax return to the head of the competent tax office at the time of submission of the tax return pursuant to the provision of Article 20 (1) of the Act: Provided, That where the tax base and tax amount are not submitted or the application for annual payment is not submitted at the time of submission of the tax return, he may submit the application within the due date after receiving the notice of the tax base and tax amount, which is subject to the imposition of the additional tax. Thus, since the unpaid tax amount which is subject to the imposition of the additional tax refers to the tax amount which is not paid within the due date or paid under the due date for annual payment, an application for annual payment is also included in the amount to be applied for voluntary payment.

The decision of the court below to the same purport is just, and there is no error of law such as misunderstanding of legal principles as to erroneous payment and annual payment, or incomplete deliberation, as alleged in the grounds

4. Therefore, all appeals are dismissed, and the 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 Lee Yong-hun (Presiding Justice)