[1] The case holding that a disposition rejecting payment in kind is unlawful on the ground that the inherited real estate is a small-scale self-owned land scattered in many places, on the ground that the management and disposition is inappropriate, although there is no ground to deny payment in kind under the inheritance

[2] Where an inheritance real estate upon receipt of an application for payment in kind is subject to a non-permission of payment in kind, the case holding that the disposition of payment in kind is lawful, as long as such circumstances are not known at the time of the disposition, even though the obligation under security is extinguished and the registration is cancelled

[1] The case holding that the disposition rejecting payment in kind is unlawful on the ground that the inherited real estate does not constitute the grounds for refusal of payment in kind under the proviso of Article 73(1) and (2) of the Inheritance Tax and Gift Tax Act, Article 71(1) of the Enforcement Decree of the same Act, and Article 19-4 of the Enforcement Rule of the same Act, on the ground that it is a small-scale self-owned land located in several regions, on

[2] Where an inherited real estate upon receipt of an application for payment in kind is subject to a disposition of non-permission for payment in kind, the case holding that the disposition of non-permission for payment in kind is lawful, as long as such circumstances are not known at the time of the disposition, even if the secured obligation becomes extinct and the registration

[1] Article 73 of the Inheritance Tax and Gift Tax Act; Article 71(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; Article 19-4 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 505 of April 25, 2006) / [2] Article 73 of the Inheritance Tax and Gift Tax Act; Article 71(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; Article 19-4 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance

Plaintiff 1 and four others (Law Firm Yang & Yang, Attorneys Quota-jin et al., Counsel for the plaintiff-appellant)

Head of Yongsan Tax Office

November 15, 2007

1. On December 27, 2005, the part on real estate indicated in the attached Table 1, 3, 4, and 5 among the disposition of rejection of payment in kind to the plaintiffs as to each real estate stated in the attached Table that the defendant made against the plaintiffs shall be revoked.

2. The plaintiffs' remaining claims are dismissed.

3. Of the costs of lawsuit, 20% is borne by the Plaintiffs, and the remainder 80% is borne by the Defendant, respectively.

The defendant's disposition of refusing payment in kind with respect to each real estate listed in the separate sheet (hereinafter "each real estate of this case") against the plaintiffs on December 27, 2005 shall be revoked.

1. Details of the disposition;

A. On June 24, 2004, Plaintiff 1 was the wife of the Nonparty (hereinafter “the deceased”), who died on June 24, 2004, and the remaining Plaintiffs except Plaintiff 1 inherited each of the instant real estate, etc. from the deceased as their children.

B. The Plaintiffs assessed the value of each of the instant real estate as zero won at the time of the inheritance tax declaration on the grounds that the Seoul Special Metropolitan City is occupying each of the instant real estate as a road without permission.

C. However, the director of the Seoul Regional Tax Office collected the amount of KRW 485,531,00,000, which is the sum of KRW 54,908,00 ( KRW 16,236,00, KRW 230, KRW 10,000 for real estate listed in the attached list, KRW 632,00 for two real estate, KRW 3 real estate, KRW 13,662,00 for four real estate, KRW 13,938,00 for five real estate, and KRW 13,938,00 for five real estate) and notified the Defendant of the omission of the report. On November 2005, the Defendant notified the Plaintiffs of the correction of KRW 280,598,490 for inheritance tax.

D. On November 10, 2005, the Plaintiffs assessed each of the instant real estate on the basis of the above appraised value and applied for payment in kind under the Inheritance Tax and Gift Tax Act (hereinafter “Inheritance Tax Act”) to the Defendant, but on December 27, 2005, the Defendant rejected the payment in kind from the Plaintiffs on the ground that each of the instant real estate was an inappropriate property.

E. The plaintiffs appealed to the National Tax Tribunal on January 4, 2006, but the National Tax Tribunal dismissed the above request on January 10, 2007.

[Reasons for Recognition] Unsatisfy, Gap 1 and 3, Gap 4-1, 2, Gap 5, 6-each 1 and 5, Eul 1 and 3, the purport of the whole argument

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Whether the management and disposition is inappropriate

In full view of the relevant laws and regulations, where the management and disposition of the property for which payment in kind is applied for in accordance with the proviso of Article 73(1) of the Inheritance Tax and Gift Tax Act is inappropriate, it shall not be arbitrarily determined by the tax authority, but shall be limited to the cases prescribed in Article 73(2) of the Inheritance Tax and Gift Tax Act, Article 71(1) of the Enforcement Decree of the same Act, and Article 19-4 of

However, although it is clear that the real estate listed in the separate list Nos. 1, 3, 4, and 5 among the real estate in this case does not fall under the above provisions, it is located in a small-scale self-owned land in various regions, making it impossible to use and develop independently, and based on the restrictions, and making it inappropriate to manage and dispose of the real estate on the ground that there is no future plan for expropriation and compensation,

In addition, although 2 real estate listed in the separate list among each of the real estate in this case was registered for the establishment of a mortgage on the maximum debt amount of 1.6 million won in the name of the Seoul Bank, as a result of the recent confirmation, the secured debt was already extinguished, and only the related parties did not make a registration of cancellation of the mortgage due to their mistake, and the plaintiffs are currently seeking to take procedures for cancellation of the registration of the establishment of a mortgage, and it does not fall under the above provisions and does not fall under the property inappropriate for administration and disposition under the Inheritance Tax Act and subordinate statutes. Thus, this is also illegal.

(2) A deviation from or abuse of discretionary power

The reason that each real estate of this case is located in a small-scale autonomous land in several regions or there is no future plan for expropriation and compensation does not constitute an inappropriate property under Article 71(1) of the Enforcement Decree of the Inheritance and Gift Tax Act and Article 19-4 of the Enforcement Rule of the same Act. However, the Defendant’s act of this case otherwise reported and disposed is unlawful by abusing discretion or abusing discretion.

(3) Equity with other inherited real estate;

In addition to each of the instant real estate inherited from the deceased, there are lots of land owned by the Seoul Special Metropolitan City as a road. The remaining land except each of the instant real estate is assessed as zero won and no inheritance tax is imposed. The inheritance tax is assessed as having the value of each of the instant real estate, and the disposition of this case, which was rejected without any reasonable ground by the plaintiffs on the application for payment in kind of the inheritance tax, is unlawful as it does not comply with equity.

B. Relevant statutes

Inheritance Tax and Gift Tax Act

Article 73 (Payment in Kind)

(1) Where the value of real estate and securities exceeds 1/2 of the value of the relevant property among property inherited or donated and the amount of tax paid by inheritance tax or gift tax exceeds 10 million won, the superintendent of the competent tax office may, upon a request of the person liable for tax payment, grant a payment in kind only for the real estate and securities under the conditions as prescribed by the Presidential Decree: Provided, That where it is deemed inappropriate to manage and dispose of the property

(2) The scope of securities which may be paid in kind, and procedures for payment in kind, if deemed inappropriate, shall be prescribed by Presidential Decree.

Enforcement Decree of Inheritance Tax and Gift Tax Act

Article 71 (Payment in Kind of Property inappropriate for Management or Disposition)

(1) Where the head of a tax office deems it inappropriate to manage and dispose of property for which an application for payment in kind is made pursuant to Article 73 (1) of the Act on the grounds falling under any of the following subparagraphs, he/she may issue an order to change it into another property subject to payment in kind, or to manage and dispose of it:

1. Where any property right, such as superficies, easements, chonsegwon, and mortgage, is established;

2. Where the land and the building on such ground are different from the owner.

3. Where a cemetery exists in part of land.

4. Where the Ordinance of the Ministry of Finance and Economy prescribes that the management and disposition is inappropriate on the grounds similar to those of subparagraphs 1 through 3.

Enforcement Regulations of the former Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 505 of April 25, 2006)

Article 19-4 (Scope of Property Ineligible for Management and Disposition) "Cases prescribed by Ordinance of the Ministry of Finance and Economy" in Article 71 (1) 4 of the Decree means any of the following cases:

1. A building and its appurtenant land constructed without a building permit;

2. Property the ownership of which is jointly owned;

3. The relevant stocks, etc. in case where the listing is abolished or the registration of the Association is revoked under the Securities and Exchange Act.

4. Cases similar to subparagraphs 1 through 3, which are recognized by the Commissioner of the National Tax Service.

(c) Markets:

(1) Whether the management and disposition is inappropriate

(A) As to real estate listed in the separate sheet 1, 3, 4, 5

Article 73 (1) (proviso) of the Inheritance and Gift Tax Act provides that "where it is deemed improper to manage and dispose of property which has been applied for payment in kind, it need not be permitted to pay in kind"; Article 73 (2) provides that "where it is deemed inappropriate to manage and dispose of property in kind, matters necessary for procedures for payment in kind shall be prescribed by Presidential Decree; Article 71 of the Enforcement Decree of the same Act provides that "where property which is applied for payment in kind is established in accordance with Article 73 (1) of the Act (Article 73 (1) of the Act), such as superficies, easement, right to lease on a deposit basis, mortgage, etc. (Article 73 (2) of the Act; Article 73 (1) of the Enforcement Decree of the same Act provides that "where it is deemed inappropriate to manage and dispose of property in kind on the grounds prescribed by Ordinance of the Ministry of Finance and Economy (Article 9 (3) of the Ministry of Finance and Economy) and part of the land is revoked, it shall not be subject to permission or shall be ordered to change of payment in kind (Article 40).

However, in light of the details of and reasons for the instant disposition, the Defendant deemed that the instant disposition was inappropriate for the management and disposition of real estate 1, 3, 4, and 5 as stated in the separate sheet on the ground that it is self-contributable land for real estate 1, 3, 4, and 5 as stated in the separate sheet on the ground of Article 71(1)4 of the Enforcement Decree of the Inheritance and Gift Tax Act and Article 19-4 subparag. 4 of the Enforcement Rule of the same Act, and it is difficult to view that the evidence No. 4 corresponds to “those recognized by the Commissioner of the National Tax Service as similar to subparagraphs 1 and 3,” as stipulated in Article 19-4 subparag. 4 of the Enforcement Rule of the same Act in light of the form, content, and system, etc. of the instant disposition, and it is difficult to view that the Defendant’s disposal of each of the instant real estate was conducted without any grounds cited by the Defendant, and thus, the remainder of the Plaintiffs’ assertion is unlawful.

(B) As to the 2 real estate listed in the separate sheet

Comprehensively taking account of the proviso to Article 73(1) and (2) of the Inheritance and Gift Tax Act and Article 71(1)1 of the Enforcement Decree of the same Act, where it is deemed inappropriate to manage and dispose of property, the head of a tax office may not grant permission for payment in kind for such property, if the mortgage, etc. on the property for which payment in kind

However, in light of no dispute between the parties, or comprehensively taking account of the overall purport of the arguments as to the evidence Nos. 5-2 and the evidence Nos. 7, the registration of establishment of a mortgage establishment as to the 2 real estate indicated in the separate sheet as to the Seoul Northern District Court No. 8788, Mar. 22, 1969; the registration of establishment of a mortgage establishment as to the 160,000 won of the maximum debt amount; and the Seoul District Court No. 49893, Jun. 14, 2007; and the registration of cancellation of the registration of establishment of a mortgage was completed on the ground of the termination on June 14, 2007. The time of the instant disposition is as seen earlier.

However, barring any special circumstance, the legality of an administrative disposition is determined at the time of the disposition, and the new facts that were not submitted at the time of the disposition cannot be considered as reference material to determine the legality of the disposition (see, e.g., Supreme Court Decision 88Nu1257, Mar. 28, 1989). Thus, the cancellation of the registration of creation of a neighboring real estate listed in the separate sheet 2 is one year and six months after the date of the disposition in this case. The mortgage is a mortgage established by reserving the determination of the maximum amount of the secured claim and reserving the determination of the obligation in the future. Thus, the extinction or transfer of the obligation until the secured obligation becomes final and conclusive is not affected by the right to collateral security. Thus, unless there is any evidence to prove that the Defendant had no intention to continue the transaction, such as all secured claims on the neighboring mortgage at the time of the disposition in this case and the obligor borrowed new money from the obligee, and thus, the Defendant’s ground for the management and disposition in this case’s separate sheet 2 is justified.

(2) A deviation from or abuse of discretionary power

As seen earlier, the disposition of this case concerning the 2 real estate listed in the separate sheet was lawfully taken in accordance with the relevant laws and regulations. In light of such circumstances, details, etc., it cannot be said that the disposition of this case concerning 2 real estate listed in the separate sheet was deviates from the scope of discretion or abused discretionary power. Therefore, the above assertion by the plaintiffs is without merit.

(3) Equity with other inherited real estate;

Even if the property value of other real estate was assessed as zero won and inheritance tax was not imposed, and inheritance tax is imposed is not imposed, and payment in kind with regard to 2 real estate listed in the separate sheet among each real estate of this case, among the real estate of this case, the issue of whether the imposition of inheritance tax is legitimate is separate from the disposition of this case as to 2 real estate listed in the separate sheet, and it is not directly related to whether it is illegal or not, and the issue of whether payment in kind is permitted in kind is based on the unique relation of rights, status, and characteristics of each property of this case, and therefore, the plaintiffs' assertion on different premise is not justified.

3. Conclusion

Therefore, the plaintiffs' claim of this case is justified within the above scope of recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.

[Attachment] List of Real Estate: omitted

Judges Jeong Jong-chul (Presiding Judge) (Presiding Judge)