In a case where a collective lease contract is concluded even if the owners of land and buildings are different, whether the basic rules of the National Tax Service, which provides that the value converted from the total rent of land and buildings on the basis of the standard market price of land and buildings shall be divided equally in proportion to the standard market price of the land

Article 61(7) of the Inheritance Tax and Gift Tax Act; Article 50(7) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20720, Feb. 29, 2008)

Supreme Court Decision 92Nu7580 Decided December 22, 1992 (Gong1993Sang, 640) Supreme Court Decision 2005Du5611 Decided February 8, 2007, Constitutional Court Decision 2005HunBa39 Decided June 29, 2006 (HunGong117, 921)

Plaintiff

The Director of Gangnam District Office

Seoul High Court Decision 2006Nu29029 decided May 11, 2007

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

The grounds of appeal are examined.

1. Article 61(7) of the Inheritance Tax and Gift Tax Act (hereinafter “the Act”) provides that “in the case of a property for which a de facto lease contract is concluded or a lease is registered, the larger amount of the assessed value based on the rent, etc. as prescribed by the Presidential Decree and the value assessed according to the supplementary assessment methods as prescribed in Article 61(1) through (6) of the Act shall be the value of the property.” Article 50(7) of the Enforcement Decree of the Act delegated by the Act (amended by Presidential Decree No. 20720, Feb. 29, 2008) provides that “The assessed value as prescribed by the Presidential Decree” means the sum of the amount calculated by dividing the rent for one year by the rate as prescribed by the Ordinance of the Ministry of Finance and Economy

The legislative intent of each of the above provisions is to calculate the value of the inherited or donated property most adjacent to the market price by the lease deposit, etc. (see, e.g., Constitutional Court Order 2005HunBa39, Jun. 29, 2006) in the case of the real estate for which the lease contract has been concluded, since the lease deposit or monthly rent is set within the scope of the objective exchange value of the pertinent property, in the case of the real estate for which the lease contract has been concluded (see, e.g., Constitutional Court Order 2005HunBa39, Jun. 29, 2006). Meanwhile, even if the value of donated property cannot be calculated due to the conversion value under Article 6

In addition, the general rules of the National Tax Service is merely an administrative rule that instructs the criteria for interpretation and enforcement of the tax law within the tax authority, and it is not a law that binds the court or the people, so the basic rules themselves cannot be a legitimate basis for taxation (see Supreme Court Decision 2005Du5611, Feb. 8, 2007, etc.).

According to the reasoning of the judgment below, the court below, after compiling the evidence, found facts as stated in its reasoning. Article 61 (7) of the Act provides that "Where the owners of land and buildings enter into a collective lease agreement even though the owners of land and buildings do not have any provision, the amount converted according to the method prescribed in Article 61 (7) of the Act based on the total rent, etc. for the land and buildings shall be divided according to the standard market price of the land and buildings" (hereinafter "the provision on proportional distribution in this case"). However, in order to achieve the rationality of the provision on proportional distribution in this case, the individual land price and building standard market price, which are the land standard market price, shall be reflected in the market price at the same rate, and there is no evidence to acknowledge the provision in this case. The market price reflects the market price of the building standard market price, which is all different from that of the officially assessed individual land price. Therefore, the provision on proportional distribution in this case is not only reasonable, but it is not acceptable to accept the provision on proportional distribution in this case.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the appraisal of donated property, as otherwise alleged in the ground of appeal, in light of the following: (a) the value of donated property calculated by the court below pursuant to the proportional distribution provision of this case was calculated based on the total rent, etc.; and (b) the value calculated based on the original supplementary evaluation method was calculated based on the conversion process again as the standard market price.

The grounds of appeal are that the Supreme Court Decision 93Nu1435 delivered on June 11, 1993, etc. is not appropriate to be invoked in this case, since the case is different.

2. Therefore, the appeal is 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 Shin Young-chul (Presiding Justice)