Whether Article 34(1) of the former Inheritance Tax Act (amended by Act No. 3578 of Dec. 21, 1982) applies to the act of transferring property between lineal ascendants and descendants whose normal price is paid.

The purpose of Article 34(1) and (3) of the former Inheritance Tax Act (amended by Act No. 3578 of Dec. 21, 1982) is to regard the transfer of property between lineal ascendants and descendants as a gift, even if the normal transaction value was paid as the price for transfer, so long as the transfer does not fall under any of the cases prescribed in subparagraphs of paragraph (3) of the same Article.

Articles 34(1) and 34(3) of the former Inheritance Tax Act (amended by Act No. 3578 of Dec. 21, 1982)

[Judgment of the court below]

Deputy Director of the Tax Office

Seoul High Court Decision 84Gu371 delivered on January 31, 1985

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

The grounds of appeal by the defendant litigant are examined.

According to the reasoning of the judgment below, the court below determined that even if the above trading act constitutes a transfer between lineal ascendants and descendants, even though the above trading act constitutes an act of transfer between lineal ascendants and descendants, the provision on deeming donation under Article 34 (1) of the Inheritance Tax Act (amended by Act No. 3578 of Dec. 21, 1982) does not apply to the sale between the plaintiff and the non-party, which was made between the plaintiff and his mother on April 10, 1982 as to the real estate of this case, the tax disposition of this case is unlawful on the premise that the above provision is applicable in the case of a transfer at a cost, which is a normal transaction price, under the premise that the above provision is applicable.

However, according to Article 34 (1) of the Inheritance Tax Act, the value of the property transferred to the spouse, or lineal ascendants or descendants shall be deemed to have been donated to the transferee, notwithstanding the fact that the transferee has paid the price of the property. Paragraph (3) of the same Article provides that even if the transferor transfers the property between his lineal ascendants or descendants by the auction procedure; 4. When the property is disposed of through the auction procedure under the National Tax Collection Act; 4. When the securities are disposed of through the Korea Stock Exchange under the conditions as prescribed by the Presidential Decree; 5. Where the property is transferred under the conditions as prescribed by the Presidential Decree, the provision on deeming donation of the above Paragraph (1) shall not be applicable (Article 41 (3) of the Enforcement Decree of the same Act which was enforced at the time of its transfer, was not enacted, and it shall be limited to where the transfer falls under the above subparagraph 5, and the sale or purchase of the property requires registration or exercise of the right, and thus, the purport of the above provision is clearly different from the purport of each subparagraph of Article 31 of the Inheritance Act.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial. It is so decided as per Disposition by the assent of all participating judges.

Justices Lee Jin-Post (Presiding Justice)