When a donee returns donated property after donation, the scope of the donated property; and

Since a donee returned donated property after the lapse of three months from the date of donation, there is a gift tax liability.

Article 31 of the Inheritance Tax and Gift Tax Act: Scope of donated property

1. The plaintiff's conjunctive claim shall be dismissed.

2. The plaintiff's primary claim is dismissed.

3. Litigation costs shall be borne by the plaintiff.

Purport of Claim

In the first place, it is confirmed that the disposition imposing gift tax on the plaintiff as of April 20, 2006 is null and void, and the said disposition is revoked in the first place.

1. Details of the disposition;

A. On October 24, 2006, the Plaintiff filed a registration of transfer of ownership on the ground of donation made on October 23, 2006 under the name of the Plaintiff (hereinafter referred to as “the instant building”) with respect to a cement brick structure and a 64.8 square meters per 64.8 square meters per floor of the cement brick structure and a branch of a branch of a roof, cement brick structure, a brick structure, a prefabricated roof, a prefabricated 64.8 square meters house, and a prefabricated panel building and a prefabricated-type prefabricated-type prefabricated-type prefabricated-type type one building (hereinafter referred to as “the instant building” collectively referred to as “the instant building”) under the name of the Plaintiff.

B. Accordingly, on April 20, 2007, the Defendant imposed gift tax of KRW 4,082,757 (including additional tax) on the Plaintiff.

C. After that, on August 16, 2007, the Plaintiff filed for the cancellation of the ownership transfer registration of this case on the ground of the cancellation of the agreement on July 25, 2007 as to the building of this case.

[Ground of recognition] The items of evidence Nos. 1, 2, 1 and 2, and the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff

Since the Plaintiff’s donation of the instant building from Kim○-○ and then the agreement was rescinded, and the registration of this case was cancelled to restore it to its original state, the instant disposition without any ground is deemed unlawful, and thus, the Plaintiff’s primary confirmation of invalidity of the instant disposition and revocation of the instant disposition is sought as a preliminary measure.

B. Defendant

The plaintiff's conjunctive claim is unlawful as it was filed without going through the pre-trial procedure on the disposition of this case.

3. Related statutes;

【former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same)】

Article 2 (Gift Tax Taxables)

(1) In case where, owing to a third party donation (excluding the donation becoming effective upon death of the donor, hereinafter the same shall apply), there exists donated property on the donation date falling under one of the following subparagraphs, the gift tax shall be levied, pursuant to this Act, on such donated property:

1. Where a person to whom property has been donated (hereinafter referred to as " donee") is a resident (including a non-profit corporation, the head office or main office of which is located in Korea; hereafter the same shall apply in this paragraph and Articles 54 and 59), all of the donated property, as a donation, by the

Article 4 (Gift Tax Liability)

(1) Testamentary donees shall be liable to pay gift tax pursuant to this Act.

Article 31 (Scope of Donated Property)

(4) Where the donated property (excluding money) is returned, pursuant to an agreement between the parties concerned, within the report deadline under the provisions of Article 68, it shall be deemed that the donation had never been made (the proviso omitted).

(5) In case where the donee returns the donated property (excluding money) to the donor or re-donates it to the donor within 3 months after the time limit for report pursuant to the provisions of Article 68 expires, the gift tax shall not be levied on such returned or re-donations.

Article 68 (Reporting of Tax Base of Gift Tax)

(1) A person liable to pay the gift tax under Article 4 shall, within three months from the date of donation, report the taxable value and tax base of the gift tax under Articles 47 and 55 (1) to the superintendent of the competent tax office under the conditions as prescribed by the Presidential Decree.

4. Judgment as to the main claim

A. According to the above relevant Acts and subordinate statutes, the obligation to pay the gift tax is, in principle, established when a person received property from another person, and thereafter returned the donated property pursuant to an agreement between the parties, and thus, the obligation to pay the gift tax is not extinguished. However, in cases where a donee returns the pertinent property to the donor immediately after the donation of the property, imposing the gift tax on the original donated property may impose an excessive tax burden on the donee, and in cases where the donee returns the donated property within three months after the donation of the property, the gift tax on the original donated property

B. In the instant case, as seen earlier, the Plaintiff was obligated to pay gift tax on the donation of the instant building, and as such, the Plaintiff’s assertion on this part is without merit, since it returned the instant building to Kim○○ on August 16, 2007, after three months from the time of acquisition by donation from Kim○ on October 24, 2006, pursuant to the agreement between the parties to the instant building from August 16, 2007.

5. Whether the action for the preliminary claim is legitimate;

Unlike the principle of discretionary transfer of administrative appeals applicable to the general administrative litigation, the administrative litigation seeking the revocation of the imposition of gift tax, as in this case, must undergo a prior trial procedure, such as a request for examination or a request for trial (including each case where an objection is raised) as prescribed by the Framework Act on National Taxes (Articles 55 and 56 of the Framework Act on National Taxes). In this case, there is no evidence to acknowledge that the Plaintiff filed a lawsuit on the conjunctive claim through the prior trial procedure. Therefore, this part

6. Conclusion

If so, the plaintiff's conjunctive claim is unlawful and dismissed, and the primary claim is dismissed as it is without merit.