Article 66 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

2. The plaintiff's remaining claims against the defendant ○○○ director and the defendant's claims against the Republic of Korea are dismissed, respectively.

3. Of the costs of lawsuit, 1/2 of the part arising between the Plaintiff and the Defendant ○○○ Head of the tax office shall be borne by the Plaintiff, and the remainder by the Defendant ○○ Head of the tax office respectively, and the part arising between the Plaintiff

Claim against Defendant Republic of Korea: Defendant Republic of Korea shall pay to the Plaintiff KRW 43,289,211 and Ghana

From May 10, 2007 to May 6, 2009, 5% per annum and 20% per annum from the next day to the day of full payment.

A. On August 10, 1974, the Plaintiff inherited 1,254 m29 m20 m2 (hereinafter “instant land”) among the said land by an agreement division, around August 10, 1974, ○○○, ○○-si, ○○○○, by means of consultation and division. On April 1999 and April 200, the Plaintiff leased 1,254 m2 to two other persons.

B. The instant land was included in a road zone around May 200 (Seoul Local Land Management Office Notice No. 2000-157) and was expropriated in ○○○ City on December 31, 2003, and the Plaintiff received 271,078,90 won as compensation for the instant land.

C. On April 1, 2005, the head of the Defendant ○○○ Tax Office imposed capital gains tax of KRW 48,355,236 on the gains from the transfer acquired by the Plaintiff from the expropriation of the instant land (hereinafter “instant first disposition”). As the Plaintiff did not pay it within the given period, he/she calculated KRW 61,536,160 from April 10, 2006 to May 9, 2007 under the name of the Plaintiff’s capital gains tax and its additional dues. In addition, on November 1, 2007, the head of the Defendant ○○○ Tax Office imposed capital gains tax of KRW 4,835,523 and additional tax of KRW 4,424,504 on the grounds that the Plaintiff did not report and pay it within the given period (hereinafter “instant disposition”).

[Recognition] Facts without dispute, Gap evidence 2, 12, Eul evidence 1-1, 2-2, and the purport of the whole pleadings.

2. Determination

(a)the recommendations of the Parties;

1) The plaintiff's assertion

Since August 10, 1974, the Plaintiff resided in ○○○ City and directly cultivated general crops in the instant land. From April 1998 to the time the instant land was expropriated, the Plaintiff cultivated trees jointly with Nonparty 2,975 square meters in the portion of 2,975 square meters excluding 1,254 square meters that were leased to ○○○ and 2,00,000,000,000 won from April 1, 1998. As such, the Plaintiff satisfies the requirements for reduction and exemption of capital gains tax on the instant land. As such, the key part of the instant disposition among the instant disposition 1 is null and void due to a defect of large and clearness, and the amount of capital gains tax on the instant land reverted to the Defendant’s Republic of Korea and its additional charges should be returned to the Plaintiff by unjust enrichment. Moreover, as long as the disposition imposing capital gains tax on the instant land is null and void, the part of the instant disposition on the instant land should be revoked.

2) The defendant's assertion

According to the Local Tax Operation Detailed Rules (Ministry of Government Administration and Home Affairs, February 1, 2001) 197-1, where a nursery income does not accrue as a result of temporarily planting and selling seedlings for the purpose of commercial display, or storing them for the purpose of commercial sale, it is excluded from agricultural income tax. However, considering the fact that there was installation of farmland-related landscaping, stone craft, etc. on the land in this case, which is not related to the farmland in this case, and that there were excessively large trees compared to the size of the land, and that the Plaintiff did not present objective data on the details of the acquisition and sale of seedlings, and that the seedlings planted on the land in this case were temporarily planted for the purpose of commercial display or stored for the purpose of sale, and thus, the cultivation income was not generated. Accordingly, the issue of land was lost as farmland at the time of expropriation.

(b) Related statutes;

Article 3 (Restrictions on Special Cases of Taxation)

Article 66 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

C. Determination

1) Whether the first disposition is lawful

Article 69(1) of the Restriction of Special Taxation Act (amended by Act No. 7003, Dec. 30, 2003; hereinafter the same) provides that if a person who resides in a location of the land has cultivated directly for not less than eight consecutive years and has transferred the land subject to imposition of agricultural income tax, he shall be exempted from the transfer income tax. The fact that the Plaintiff resided in ○○○ City, which is the seat of the instant land, in ○○○○ City, which is the seat of the instant land, and directly cultivated the said land for not less than eight years is not disputed between the parties, but there is a dispute between the parties as to whether the pertinent land was subject to imposition of agricultural income tax at the time of expropriation

According to Articles 197 and 198 of the Local Tax Act (amended by Act No. 7843 of Dec. 31, 2005) and Article 147 of the Enforcement Decree of the same Act, a person who has income accruing from the cultivation of crops belonging to the classification of crop cultivation business among agriculture in the Korean Standard Industrial Classification Table shall pay the agricultural income tax, and the Korean Standard Industry Classification (Notice No. 2000-1 of the Statistics Korea Notification No. 2000 of Jan. 7, 200) classify seeds and seedlings as crops cultivating business. Furthermore, the Local Tax Operation Rule (Ministry of the Interior of the Interior of February 1, 2001) of the Local Tax Act (amended by Act No. 197-1 of Feb. 1, 2001) provides that where there is no farmland income from the cultivation of crops for the purpose of temporarily selling, selling, or selling them for the purpose of selling them, it is not subject to agricultural income tax, but it is subject to taxation if the cultivation income accrues by growing for a long period

However, the following facts are: Gap evidence 19, Eul evidence 24-1, Eul evidence 2-2; Gap evidence 3; Gap evidence 25,26; Gap evidence 25, and the fact-finding on the ○○○○ market in this court; (1) from April 1998, non-party ○○○ performed a flood tree as well as the plaintiff on the land in this case; and (2) around May 10, 2002 received compensation KRW 62,70,000 as to the trees on the land in this case from ○○○○ market; (3) around December 2001, the land in this case was somewhat concentrated on the land in question; (4) the land in this case was also subject to expropriation; and (5) the Plaintiff and ○○○○○’s new trees were not related to the land in this case; and (4) the land in this case’s 2,975m2 and 2600m2, and (3) the land in this case’s new trees were not related to the land in this case.

In addition to the above recognized facts, if trees are temporarily planted for the purpose of exhibition, it is sufficient to transplant only a number of trees necessary for each type of trees, such as the land at issue, and there is no need to transplant a large number of trees for each type, such as the land at issue, and the display and sale of trees are not included in the compensation details for the Plaintiff and Ma○ order, etc., in view of the fact that planting trees are not temporarily planted for the purpose of exhibition, it is difficult to view that planting trees were temporarily planted on the land at issue, and the Plaintiff and Ma○○○ seems to have raised the farming income subject to agricultural income tax by cultivating trees on the land at issue.

If so, the key land is the farmland subject to reduction or exemption of transfer income tax at the time of expropriation of the land in this case, so the first disposition is illegal.

2) Whether the first disposition is null and void as a matter of course

In order for a taxation disposition to be null and void as a matter of course, it is insufficient to say that there is an illegal cause, and its defect is in violation of an important statute and objectively obvious. In determining whether there is a significant and apparent defect, it is necessary to examine from a teleological perspective the purpose, meaning, function, etc. of the laws and regulations which form the basis for the taxation in question and to reasonably consider the specificity of the specific case itself. The difference in taxation for a person who has no legal relation or factual relations which form the basis for the taxation in question is grave and obvious, but if there are objective circumstances that make it possible to believe that the legal relation or factual relations which is not subject to taxation is subject to taxation, if it is possible to accurately investigate the factual relations, it cannot be deemed that the defect is a serious defect, and thus, it cannot be deemed that the illegal taxation disposition that misleads the fact of taxation in question is null and void as a matter of course (see, e.g., Supreme Court Decision 200Da24986, Jul. 10, 201).

However, as seen earlier, the details of compensation for obstacles to the land of this case included materials unrelated to farmland cultivation, such as landscape, pond, stone craft, etc., and the Plaintiff did not file an application for reduction or exemption of capital gains tax on the land of this case. As such, there were objective circumstances to believe that the land of this case was not subject to reduction or exemption of capital gains tax, and whether the portion of the land in this case is subject to taxation can be identified as the Defendant’s expenses to accurately investigate the factual relations. Thus, the defect in the first disposition cannot be seen as apparent apparent, and thus, it does not constitute grounds for nullification.

3) Whether the second disposition is a law

A) Additional tax on negligent tax returns

The proviso of Article 47(2) of the Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006) provides that when national taxes are reduced or exempted, additional taxes shall not be included in the national taxes subject to such reduction or exemption. Accordingly, Article 3(2) of the Restriction of Special Taxation Act provides that taxes subject to reduction or exemption under this Act, etc. shall not include additional taxes, except as otherwise provided in the relevant Act. Thus, even if capital gains tax which is the principal tax is reduced or exempted under the Regulation of Tax Reduction or Exemption Act, additional taxes shall not be reduced or exempted (see, e.g., Supreme Court Decision 95Nu14602, May 16, 1997

In addition, the amount to be reported under Article 110 (1) of the Income Tax Act (amended by Act No. 7006 of Dec. 30, 2003; hereinafter the same) shall be the tax base for capital gains for the current year, and the reduction or exemption of capital gains tax pursuant to Article 93 of the same Act shall be applied to the calculation of capital gains tax by first applying the tax rate to the tax base. According to Article 115 (1) of the same Act, the amount of income tax for unfaithful return is imposed on the basis of the calculated tax before the reduction or exemption of capital gains tax is applied. Thus, even if the capital gains tax, which is the principal tax, can be reduced or exempted, the obligation to report the tax base of capital gains

Since the fact that the Plaintiff did not file a final return on the capital gains of the instant land is as seen earlier, even if the provisions on capital gains tax reduction and exemption are applied to the land at issue, the portion of the additional tax on negligent tax returns in the second disposition

B) Additional payment portion

According to Article 115 (2) of the Income Tax Act, where a resident fails to pay the transfer income tax under the provisions of Article 111 of the same Act, an amount calculated by applying the rate prescribed by the Presidential Decree to the unpaid transfer income tax amount shall be paid as an additional tax for unfaithful payment. Since Article 111 (1) of the same Act deducts the tax amount reduced or exempted from the transfer income tax amount, so an additional

As seen earlier, the provision on reduction and exemption of capital gains tax on the part of the land at issue among the capital gains of this case is applicable. As such, the part of KRW 3,12,532 [ =4, 424, 504 square meters (2, 975 square meters/4, 229 square meters) on the land at issue in the disposition of imposition of KRW 4,424,50 against the Plaintiff is unlawful.

4) Sub-committee

Since the first disposition cannot be deemed null and void, the claim for return of transfer income tax paid by the Plaintiff to Defendant Republic of Korea before the invalidation of the first disposition is without merit. The second disposition is unlawful only for the part on imposition of additional dues on the issues of land, and the remainder is lawful. As such, the part on the claim against Defendant ○○○ Head of the tax office seeking cancellation of the imposition of additional dues on the issues of land due to an erroneous payment

3. Conclusion

Of the instant claims, the part seeking revocation of the disposition imposing additional tax on Defendant ○○ Head of the tax office is justified. Accordingly, the remainder of the claim against Defendant ○○ Head of the tax office and the claim against Defendant ○○ Head of the tax office against the Republic of Korea are dismissed as it is without merit, and it