The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 48(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “Gift”) provides that “the value of property contributed by a public-service corporation shall not be included in the taxable value of donated property.” The proviso (hereinafter “instant legal provision”) provides that “However, where shares of a domestic corporation contributed by a public-service corporation exceed 5/100 of the total number of outstanding stocks with voting rights of the relevant domestic corporation, the excess portion calculated in accordance with the method prescribed by the Presidential Decree shall be excluded.” Article 37(1)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22042, Feb. 18, 2010; hereinafter “instant Enforcement Decree”) provides that “where capital or amount of capital of a domestic corporation issued by the public-service corporation has been reduced, the excess portion of the capital or amount of capital shall be calculated as of the date of resolution of the stockholders’ meeting.”

The legal provision of this case delegates to the Presidential Decree the method of calculating “excess portion” included in the taxable value of donated property among shares of a domestic corporation contributed by a public-service corporation. The provision of this case according to delegation stipulates that excess portion shall be calculated on the basis of the closing date of the register of shareholders; however, there is no explicit provision regarding the evaluation date of the value; the value of property subject to gift tax should be assessed on the basis of the market value as of the donation date in principle pursuant to Article 60(1) of the Inheritance and Gift Tax Act; it is to ensure that the enforcement decree of this case should be calculated on the basis of the closing date of the register of shareholders in capital reduction regardless of the intention of a