[1] Purport of Article 9(4) of the former Inheritance Tax Act, and Article 5-2 subparag. 3 of the Enforcement Decree of the same Act, and in case where a taxpayer proves that the appraised value of the pertinent property was higher than the market value at the time of establishing a mortgage, whether the market value becomes the value of inherited property (affirmative)

[2] Legislative intent of Article 7-2(1) and (2) of the former Inheritance Tax Act, and, in cases where the aggregate amount of the inherited property disposed of by an ancestor exceeds KRW 100 million each, within two years before the date inheritance commences, whether the tax authority may include the amount in the taxable value of inherited property, unless the taxpayer proves that the purpose of use is objectively unclear (affirmative)

[1] Article 9 (4) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) and Article 5-2 subparagraph 3 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) provide that the value of the inherited property shall be calculated close to the market price by supplementing the provision of Article 9 (1) of the same Act that sets the principle of market price with respect to the appraisal of the value of the inherited property. Thus, in the event that a taxpayer proves that the assessment value of the pertinent property was more than the market price at the time of establishing a mortgage pursuant to Article 5-2 subparagraph 3 of the Enforcement Decree of the same Act, the above provision does not apply to the case where it is proved that the assessment value of the pertinent property was higher than the market price

[2] Article 7-2 (1) and (2) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) provides that where the aggregate amount of the inherited property disposed of by the ancestor or the debt borne by the ancestor, within two years before the commencing date of the inheritance, exceeds KRW 100,00,00,00,00, such disposal price or loan money shall be deemed to have been substantially converted to the burden of proving that the inheritance tax cannot be unjustly reduced due to the donation or inheritance by cash to the heir who is not easy to be exposed to taxation data, and thus, when the tax authority proves that there is an amount which is objectively unclear among them, the relevant amount may be included in the taxable value of inherited property unless the taxpayer proves

[1] Article 9(4) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) (see current Article 66 of the Inheritance Tax and Gift Tax Act); Article 5-2 subparag. 3 (see current Article 63(1)3 of the Inheritance Tax and Gift Tax Act) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) / [2] Article 7-2(1) and (2) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) (see current Article 15(1)1 of the Inheritance Tax and Gift Tax Act)

[1] Supreme Court en banc Decision 91Nu2137 delivered on March 23, 1993 (Gong1993Sang, 1312), Supreme Court Decision 92Nu897 delivered on April 13, 1993 (Gong1993Sang, 1414), Supreme Court Decision 93Nu2233 delivered on December 22, 1994 (Gong1995Sang, 710), Supreme Court Decision 97Nu8369 delivered on December 26, 1997 (Gong1998Sang, 54 delivered on December 1999), Supreme Court Decision 98Du1369 delivered on December 29, 199 (Gong200Sang, 2394 delivered on December 29, 195)

Plaintiff 1 and two others (Attorney Yoon Jae-chul, Counsel for the plaintiff-appellant)

Head of Sungnam Tax Office

Seoul High Court Decision 95Gu21893 delivered on December 19, 1996

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. Each of the Plaintiffs’ appeals is dismissed, and the costs of appeal are assessed against the Plaintiffs.

1. The plaintiffs' grounds of appeal are examined (to the extent of supplement in case of the grounds of appeal).

A. As to the misapprehension of legal principles as to the appraisal of the value of inherited property

Article 9(4) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993; hereinafter the same) and Article 5-2 subparag. 3 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993; hereinafter the same) provide for the purpose of calculating the value close to the market price by supplementing Article 9(1) of the same Act, which provides for the principle of market price, with respect to the valuation of inherited property. Thus, where a taxpayer proves that the assessment value of the relevant property was higher than the market price at the time of establishing a mortgage pursuant to Article 5-2 subparag. 3 of the Enforcement Decree of the same Act, the above provision does not apply to the case where it is proved that the market price was higher than the market price (see, e.g., Supreme Court en banc Decision 91Nu2137, Dec. 26, 1993; hereinafter the same shall apply).

According to the facts found by the court below, in establishing a collateral on the real estate of this case as collateral for loans to the mutual savings and finance company by Nonparty 1, who is the inheritee, the appraisal value of the real estate of this case appraised by the appraisal business operator belonging to the male appraisal office on September 20, 1993, was KRW 1,771,722,50, and the 1993 value of the real estate appraised on the basis of the officially announced price and the market price under the Local Tax Act was KRW 1,629,130,50, and the 1 (the ○○○; hereinafter referred to as the 'the 'the 'the 'the 'the 'the '') was no more than 00,000, which was appraised by the 'the 'the 'the 'the 'the 'the '' and the 'the 'the 'the 'the '' of the 'the 'the 'the '' were excessively assessed 190,2090,2009,20.

Therefore, the market price at the time of commencing the inheritance stipulated in Article 9(1) of the same Act and Article 9(1) of the Enforcement Decree of the same Act cannot be seen as the market price at the time of commencing the inheritance. Thus, according to the above legal principles, it is reasonable to evaluate the value appraised by an appraisal business entity for establishing the right to collateral security in accordance with the supplementary evaluation methods stipulated in Article 9(4)1 of the same Act

Therefore, the judgment of the court below which assessed the value at the time of commencing the inheritance of the real estate of this case as KRW 1,771,722,50 is just in accordance with the above legal principles. There is no error of law by misapprehending the legal principles as to the principle of substantial taxation, the principle of fair taxation, and the evaluation of the value of inherited property as

This part of the grounds of appeal cannot be accepted.

B. On the issue of whether the debt against the non-party 3 and the non-party 4 should be deducted from the value of the inherited property, and as to the violation of the rules of evidence

According to the reasoning of the judgment below, the court below held on July 1, 1991 that the non-party deceased leased the real estate of this case to the non-party 3 in 200,000,000 won as the lease deposit and that there is no evidence to acknowledge the above facts, except the evidence rejected from the non-party 4 on June 27, 1991, and that since each of the above obligations is false obligations, the amount can not be deducted from the value of inherited property pursuant to Article 4 of the former Inheritance Tax Act.

In light of the records, the court below's above evidence preparation, fact-finding, and judgment are correct, and there is no error of misconception of facts or incomplete hearing due to the violation of the rules of evidence.

Therefore, the plaintiffs' grounds of appeal pointing this out are without merit, and the remaining grounds of appeal by the plaintiffs cannot be included in the taxable value of inherited property on the premise that each of the above obligations is an existing obligation.

2. We examine the Defendant’s grounds of appeal.

Article 7-2 (1) and (2) of the former Inheritance Tax Act provides that where the aggregate amount of money or debt borne by an ancestor by kind of the inherited property disposed of within two years before the commencing date of the inheritance exceeds 100,000,000 won, the burden of proof shall be de facto converted so as not to reduce the inheritance tax by donation or inheritance to an heir in cash where the disposal price or loan money is not easy to be exposed to taxation data, and thus, if the tax authority proves that the purpose of use is objectively unclear, the amount may be included in the taxable value of inherited property unless the taxpayer proves that the purpose of use is objectively unclear (see, e.g., Supreme Court Decisions 89Nu1490, Dec. 12, 1989; 92Nu413, Sept. 25, 1992; 94Nu15929, May 12, 199; 9Nu2538, Jun. 13, 1995).

According to the reasoning of the judgment below, in calculating the amount of debts to be included in the taxable value of inherited property pursuant to Article 7-2 (2) of the former Inheritance Tax Act, the court below determined that the amount of debts to be borne by the deceased within two years before the commencement of the inheritance was KRW 535,895,427 of the total debts to the Japanese Bank, Seoul Trust Bank, the Nonghyup Federation, and the Daegu Mutual Savings and Finance Company, and that the deceased spent KRW 700,837,371 of the total amount of debts to the existing financial institution within 5 years from September 15, 1992 to the time of death, and that the amount of debts to be borne by the deceased was 50,837,371 of the existing financial institution within 00,000,000,000 won, which had been objectively proved that the above amount of debts owed by the deceased was 535,895,427,000,000 won, which had been charged to the existing mutual savings and finance company within 190.

However, since the portion of the existing loan debt amount of KRW 500,00,000, at least the amount of KRW 668,419,635, which was paid by the deceased, is clear by the fact that the court below recognized within two years prior to the date of commencing the inheritance, if it was based on the calculation method that deducts the amount of total expenditures revealed from the total amount of debts to be included in the court below, it should have been added to the amount of KRW 500,00,000 as argued by the defendant since the court below.

The court below found that the above existing loan 50,000,000 won was used for the repayment of the debt incurred not later than two years prior to the commencement date of the inheritance, and its use was revealed, by recognizing repeated repayment of the above existing loan. However, according to each evidence cited as the ground for the above fact-finding in the judgment of the court below, the court below did not conclude that the above existing loan 500,000,000 won was used for the repayment of the debt owed not later than two years prior to the commencement date of the inheritance, and the total amount of the loan owed by the non-party 19-1 or 8, and the non-party 3's testimony of the court below did not constitute the above existing loan 50,000,000 won, except for the above existing loan 20,000,000 won, which was supported by the non-party 3's testimony, and it did not constitute an unlawful fact-finding without evidence, and even if the non-party 1's expenditure amount was confirmed by the record.

Nevertheless, the court below held that the amount of debt to be included in the taxable value of inherited property does not remain on the premise that the use of the existing loan 500,000,000 has been proved all, the court below erred by misapprehending the rules of evidence or by misapprehending the legal principles as to the scope of the amount of debt to be included in the taxable value of inherited property, which affected the conclusion of the judgment. Thus, the grounds of appeal

Therefore, the part of the judgment below against the defendant is reversed, and that part of the case is remanded to the Seoul High Court for further proceedings consistent with this Opinion. The plaintiffs' appeals are dismissed, and the costs of appeal are assessed against the plaintiffs. It is so decided as per Disposition by the assent of all participating Justices.

Justices Song Jin-hun (Presiding Justice)