Requirements for deeming “a person in a special relationship” as “a person in a special relationship” under Article 34-2(1) of the Inheritance Tax Act and who has the burden of proof on such person (=tax authorities)

Article 34-2(1) of the Inheritance Tax Act, and Article 41(1) and (2)6 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 13196, Dec. 31, 190); and Article 11 of the Enforcement Rule of the same Act (amended by Ordinance of the Ministry of Finance and Economy No. 1849, Mar. 9, 191); if a person is deemed to be in a special relationship, the person must be deemed to be in a special relationship at the time of the occurrence of the cause of taxation, such as substantial taxation or fair taxation, and the fact related to the transferor must be objectively proved, and the burden of proof shall be borne by the tax authority.

Article 34-2(1) of the Inheritance Tax Act; Article 41 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 13196 of Dec. 31, 1990); Article 11 of the Enforcement Rule of the same Act (amended by Ordinance of the Ministry of Finance and Economy No. 1849 of Mar. 9, 191)

Supreme Court Decision 88Nu7032 Decided March 28, 1989 (Gong1989,699) 88Nu2861 Decided March 13, 1990 (Gong1990,904) 90Nu837 Decided April 10, 1990 (Gong190,1084)

[Judgment of the court below]

Head of the tax office

Seoul High Court Decision 91Gu13016 delivered on March 11, 1992

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

Article 34-2(1) of the former Inheritance Tax Act (amended by Act No. 3578 of Dec. 21, 1982), Article 41(1) and Article 41(2)6 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 10979 of Dec. 31, 1982), and Article 11 of the Enforcement Rule of the same Act (amended by Ordinance of the Ministry of Finance and Economy No. 1557 of Feb. 28, 1983), if a person is appointed as a related person under Article 34-2(1) of the same Act (amended by Presidential Decree No. 10979 of Dec. 31, 1982), the person must have such relation at the time of the occurrence of the cause of taxation, such as substantial taxation or equitable taxation, and the burden of proof must be objectively proved by the transferor, and the tax authority has the burden of proof (see, e.g., Supreme Court Decision 87Nu2861

According to the reasoning of the judgment below, the court below held that the disposition of this case was unlawful on the ground that the non-party, the transferor of the shares of this case, had continued to serve as a director of the non-party Boan Construction Co., Ltd. from March 14, 1980 to the time of transfer of the above shares, and the plaintiff, the representative director of the above company, who was employed in the above company on January 1, 1981, and two persons are in the same workplace relationship. However, although there is no evidence to prove that the two persons are objectively obvious that the acquisition of shares at a significantly low price due to the same workplace relationship, etc., the judgment of the court below is just in light of the above legal principles, and there is no error of incomplete deliberation as argued in the lawsuit.

There is no reason to discuss this issue.

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Choi Jae-ho (Presiding Justice)