Whether exemption from gift tax under the proviso of Article 3-2 (7) 4 of the Enforcement Decree of the former Inheritance Tax Act requires a report to the head of the tax office.

Article 3-2 (7) 4 (proviso) of the former Enforcement Decree of the Inheritance Tax Act (amended by the Presidential Decree No. 13801 of Dec. 31, 1992) provides that exemption from gift tax shall be naturally exempted if the competent Minister recognizes that there are inevitable circumstances that the property contributed to the public interest business could not be used for the public interest business.

Article 8-2(4) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993); Article 3-2(7)4 proviso of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 13801 of Dec. 31, 1992)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Lee Dong-young et al., Counsel for plaintiff-appellant)

[Plaintiff-Appellant] Law Office, Attorney Song Chang-young et al., Counsel for plaintiff-appellant-appellant-appellant-appellant

Head of the Pakistan Tax Office

Seoul High Court Decision 93Gu26887 delivered on June 10, 1994

The judgment below is reversed and the case is remanded to Seoul High Court.

The Plaintiff’s attorney’s ground of appeal is examined.

1. According to the reasoning of the judgment below, the court below found that the Plaintiff’s property as a public interest corporation is below the amount calculated by the formula provided in Article 8-2(4) of the Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1992), Article 3-2(7)4 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13801 of Dec. 31, 1992), and Article 3-2(7)4 of the same Act (amended by Presidential Decree No. 13801 of Dec. 31, 1992), although it is required to use 5% or more of the appraised value as property contributed to the Plaintiff corporation directly for public interest projects, among the property contributed to the Plaintiff corporation, it is designated as a natural green area development zone under urban planning and military protection zone. In fact, some of the above forest land is used as military installation, and the Plaintiff corporation did not directly use the property for public interest projects, and recognized that it was below the amount of gift tax exemption by the Plaintiff 130.

2. Article 8-2 (4) of the Inheritance Tax Act and the main sentence of Article 3-2 (7) 4 of the Enforcement Decree of the same Act shall be deemed to have been donated to the contributor, and gift tax shall be imposed immediately when the property falls short of the amount calculated by the prescribed formula, and the proviso of the same subparagraph shall be excluded from the case where the competent Minister deems that there is an inevitable reason, and in this case, the competent Minister must report the fact recognized by the competent Minister to the head of the competent district tax office. Thus, the exemption of gift tax under the above Enforcement Decree shall be naturally exempted from the competent Minister, and it shall not be exempted from gift tax by reporting the fact to the head of the competent tax office. Accordingly, the decision of the court below that the plaintiff cannot receive the benefit of gift tax exemption on the contrary ground that the plaintiff did not report to the head of the competent tax office by the date of the report on the settlement of accounts.

There is reason to point this out.

3. Therefore, without examining the remaining grounds of appeal, we reverse the judgment below and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Chocheon-sung (Presiding Justice)