Article 104-3 of the Income Tax Act

2. Each imposition of KRW 258,295,480 on April 7, 2009 against Plaintiff OA and OB by the head of the Seocho District Tax Office and each imposition of KRW 258,295,480 on April 7, 2009 against Defendant OCC shall be revoked on April 7, 2009.

3. The total costs of the lawsuit shall be borne by the Defendants.

The reasons for this Court shall be the same as the corresponding part of the judgment of the first instance.

2. Whether the instant disposition is lawful

A. Both claims

The plaintiffs asserts as follows. In other words, the fact that the plaintiffs did not cultivate the land of this case must be proved by the defendants. The fact that the plaintiffs did not cultivate the land of this case is shown in the self-certification and the farmland ledger issued by the competent authority and the fact that the plaintiffs did not confirm the plaintiffs' self-defense, and in addition, it is unlawful to determine that the plaintiffs did not own the land of this case merely because they were engaged in a separate occupation or engaged in a business.

The defendants asserted as follows, although the plaintiffs cultivated the land of this case, they do not fall under the "farmer" under the Farmland Act and the Enforcement Decree of the same Act, and eventually fail to meet the self-sufficiency requirement. In other words, Article 2 subparagraph 5 of the Farmland Act provides that "a farmer is constantly engaged in cultivating or cultivating crops or perennial plants in his/her own farmland or growing or growing or growing at least 1/2 of the crops or perennial plants with his/her own labor, or an agricultural corporation cultivates or growing perennial plants in its own farmland." Article 2 subparagraph 2 of the Farmland Act provides that "a farmer" means a person prescribed by Presidential Decree as an individual who is engaged in agriculture." Article 3 subparagraph 1 of the Enforcement Decree of the Farmland Act provides that "a person prescribed by Presidential Decree" is "a person who cultivates or cultivates crops or perennial plants on farmland of at least 1,00 square meters, or is engaged in agriculture for at least 190 days among the farmland of this case."

The reasons for this Court shall be the same as the corresponding part of the judgment of the first instance.

(c) Fact of recognition;

1) The plaintiff OA is in Seocho-gu Seoul Metropolitan Government 0000-0, and the plaintiff OB is in the same 000-0, respectively.

The plaintiff OCC is residing in Seocho-gu Seoul OOB 00-0, and the distance from the domicile of plaintiff OA and OB to the land of this case is about 18 km, and the distance from the domicile of plaintiff OCC to the land of this case is about 22 km, which is about about 21 to 27 km if all of them use the light highway.

2) At the pre-assessment review stage regarding each of the dispositions in this case, the person in charge of Sungnam Viewing port survey room presented the airline reading opinion that had been developed as dry field in 2004 with respect to the land in this case, and that had been cultivated as dry field from 2005 to 2007.

3) In the farmland ledger at the time of the transfer of the instant land, the farmland ledger, other than the instant land, states that, in addition to the land of this case, the Plaintiff OCC, 1,249.5 square meters, and 00 square meters per annum 1,249.5 square meters per annum and 625 square meters per annum; and the Plaintiff AB, YB, 225 square meters per annum, and 112 square meters per annum per annum, in addition to the instant land.

4) The occupation, content and income of each Plaintiff during the retention period of the instant land are as follows.

A) Plaintiff OA was in the regular course of YY area, and was engaged in the lease business of each real estate located in Gangnam-gu Seoul Metropolitan Government 00-0, and Gangnam-gu D 00-0. The total annual revenue amount of the above real estate rental business is KRW 528,000,000 in 204, KRW 1,092,000 in 205, KRW 172,000 in 206, KRW 1,72,000,000 in 206, and KRW 1,14,000 in 207.

B) The Plaintiff OB operated five businesses, including the operation of two gas stations with annual sales (as of 2006 and 2007) exceeding 10 billion won each. One of the above gas stations was opened on April 19, 2005, and part of the business operated around 2005 and around 2006 was closed.

C) Plaintiff OCC had engaged in the rental business of each real estate located in Gangnam-gu Seoul Special Metropolitan City (Seoul), 638-6, and 00-0, Gangnam-gu Seoul Special Metropolitan City DDdong 00-0. The total annual revenue amount of the above real estate rental business is KRW 582,00,000 in 204, KRW 730,000 in 205, KRW 69,000 in 2006, KRW 69,000 in 2006, KRW 731,000 in 207.

5) The number of days of departure and overseas residence of the Plaintiffs and their families during the retention period of the instant land is as follows.

- The 88th day of the plaintiff, the wife KimD 726 day, the E 1,219 day

- The 256th day of the PlaintiffB 256 day, the Hab F 88 day, the Y 906 day, the Hab 22 day

- Plaintiff OCC 163 Date J 819 Date OJ 819 Date OK 819

[Ground of Recognition] No dispute, Gap evidence 1, 9, 10 evidence, Eul evidence 2 to 5 evidence, Gap evidence 12 to 14, evidence 29 to Gap evidence 31, and the whole purport of pleading

D. Determination

1) First, we examine whether to do so.

A) Generally, the burden of proving the facts of taxation requirement in a lawsuit seeking revocation of taxation is imposed on the tax authority. The fact that the transferor of the transferred land, which is the requirement for the reduction or exemption of capital gains tax under the Restriction of Special Taxation Act, has to prove it (see, e.g., Supreme Court Decision 94Nu996, Oct. 21, 1994). However, the Defendants, who are the tax authority, have the burden of proving the requirements of non-business land whose capital gains tax is excessive under the Income Tax Act (see, e.g., Supreme Court Decision 2010Du8423, Sept.

B) As seen earlier, according to the Plaintiffs’ occupation, business contents, income, and the number of days of departure from the Republic of Korea during the holding period of the instant land, it seems that the Plaintiffs did not own the instant land.

However, considering the above facts and the following circumstances acknowledged by the above evidence, it is deemed insufficient to recognize that the land in this case was farmland that was not self-defensed by the plaintiffs.

(1) As seen earlier, it is recognized that the instant land owned by the Plaintiffs was reclaimed or cultivated as dry field from 2004 to 2007 (the Defendants do not dispute this point). Therefore, the Defendants must prove that the instant land was cultivated by a third party, not the Plaintiffs.

(2) However, evidence submitted by the Defendants as evidence that the Plaintiffs did not own the land of this case is examined, each farmland ledger (Evidence No. 2-1 through 3), the entry and departure records (Evidence No. 3, 4, and 5) of the Plaintiffs and their families (Evidence No. 6), each farming material purchase receipt (Evidence No. 6), each farming material purchase receipt (Evidence No. 7), cadastral map (Evidence No. 8), the cadastral map (Evidence No. 9), the air carrier (Evidence No. 10-1 through 5), and statistical chart (Evidence No. 11) against the Plaintiffs. Of this, the evidence supporting the fact that the Plaintiffs used in the land of this case, the remaining evidence alone seems to be insufficient to recognize the facts of the Plaintiffs’ non-self-reliance.

(3) As seen earlier, the distance between the plaintiffs' residential area and the land of this case is about 18-22 km, and when traffic is smooth, 20 minutes are used for automobiles. The plaintiffs submitted a head of the number of toll receipt for the land side of the land adjacent to the land of this case (refer to the evidence A. 22). According to the above receipt, the plaintiffs passed the land side over a considerable number of times during the holding period of the land of this case (referred to as Chapter 55, 2005, Chapter 25, 2006). (The plaintiffs asserted that the plaintiffs passed the land side trees other than the date on which the above receipt was entered, but failed to submit them due to the loss of the receipts). In light of the plaintiffs' workplace or place of business, the above existence of the toll receipt is strongly supported by the plaintiffs from time to time for the purpose of cultivating the land of this case.

(4) As seen earlier, in light of the Plaintiffs’ occupation and business details, work mode, position, annual revenue, and the number of days of departure from Korea, the Plaintiffs seems to have been able to cultivate the instant land by visiting the instant land relatively freely not only during the weekend but also during the ordinary day.

(5) If the area of the instant land (2,645 square meters) is divided by the Plaintiff, it shall be less than 882 square meters per person, which is the limit of weekend farm recognized by the Income Tax Act. In light of the location, shape, and form of use of the instant land, the entire land is not cultivated within the scope of 1,00 square meters (the Plaintiff’s assertion that the instant land was divided into three parts and cultivated one by one side, respectively. According to the images of evidence No. 29-2, etc., it is recognized that the said land was actually cultivated by three parts), and it is not impossible for the Plaintiffs, who are the siblings, to cultivate dry field for self-consumption of organic farming stations by combining with their power.

(6) The plaintiffs asserted that they cultivated dry field crops from June 2004 to November 2007, such as capital reduction, spath, spath, spath, spath, spath, mato, spath, spath, shoulder, shoulder, spath, spath, qua, etc., on which they received the donation of the land of this case, they clearly and specifically explained the details and methods of growing the land in question, the types of plants developed, the period and methods of planting, the period and methods of planting, the species of plants planted, the period and methods of planting, and the quantity of growing and growing of the planted crops, the yield of the planted crops, and the method of disposing of them. This seems to be difficult for the plaintiffs to easily grow or grow if they did not actually engage in farming activities.

(7) Furthermore, at the time consistent with the facts of self-defense, the plaintiffs submitted a self-defense certificate prepared by the head of Sungnam-si branch of the farmland management committee of Sungnam-si along with field photographs and aerial photographys, and a self-identification confirmation letter of facts prepared by the members of the farmland management committee of Sungnam-si, and KimM and KimO, an employee of the MaM commemorative Hospital in the vicinity of the land of this case. The testimony of the party PP witness, which is an employee of the same hospital, had been witnessed to self-defense in the land of this case and directly support the fact of self-defense in the land of this case. In addition, the plaintiffs submitted the evidence of payment of mid-term rental fees or various seeds and fertilizers for farmland improvement operations. Each of the above evidence is supported indirectly by the plaintiffs' self-defense in the land of this case.

(8) Although it is recognized that the source of the seeds and the fertilizer receipt submitted by the plaintiffs is an enterprise located in Seocho-dopocheon-do. However, it was not easy for the plaintiffs to purchase agricultural materials, etc. in Seocho-gu Seoul or Sungnam-si, which is the location of the land of this case. In addition, the plaintiffs' parents reside in Macheon-cheon, and there are other farmland owned by the plaintiffs, and the plaintiffs have the opportunity to visit Macheon-cheon-do, so they purchased most of the agricultural materials at that time. The plaintiffs' above assertion cannot be viewed as contrary to common sense or rule of experience.

2) Next, we examine the Defendants’ assertion relating to “farmers”.

A) According to Articles 104 and 104-3 (1) 1 (a) of the former Income Tax Act (amended by Act No. 8541 of Dec. 31, 2007; hereinafter the same), the owner of farmland does not reside in the location of the farmland or does not own farmland for non-business purposes under the conditions as prescribed by the Presidential Decree, and the tax rate of 60/100 of the tax base of transfer income shall apply to the land for non-business purposes. Article 168-8 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20681 of Feb. 22, 2008; hereinafter the same shall apply) stipulates that if the owner of farmland does not reside in the location of the farmland or if he does not own farmland for non-business purposes, he/she does not necessarily mean that he/she does not own the farmland for non-business purposes or that he/she does not own the farmland for non-business purposes in the same Si/Gun/Gu (referring to autonomous Gu works) or his/her own plants.

B) Even though it is based on the interpretation that the owner of the farmland in question is a farmer in order to be recognized as a requirement for exclusion from the land for non-business under the former Income Tax Act, according to the above facts, the plaintiffs cultivated or cultivated perennial plants by owning each land outside of the instant land, and the total amount of which is more than 1,000 square meters, respectively. Thus, the plaintiffs are deemed to meet the requirements for "farmer" under the Farmland Act and the Enforcement Decree of the same Act as claimed by the defendants.

C) In relation to this, the defendants were the Supreme Court Decision 98Du9271 delivered on September 22, 1998, which held that the plaintiffs are engaged in agriculture indirectly because they had their own occupation and cultivated in the form of the weekend farm. Accordingly, the plaintiffs asserted that they did not meet the "self-sufficiency" requirement. However, the above Supreme Court decision concerns whether the "self-employed farmer to be exempted from gift tax" in relation to the donation of farmland under Article 67-7 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 1991) constitutes "self-employed farmer to be exempted from gift tax" and it cannot be deemed that the concept corresponds to the "self-employed farmer to whom the transfer income tax under the former Income Tax Act belongs." Since it is acknowledged that the plaintiffs cultivated directly even if they had any other occupation, the plaintiffs' farmland is merely an indirect operation of agriculture as alleged by the defendants.

D) Ultimately, the Defendants’ assertion on this issue is without merit.

3) Therefore, in this case where there is no other evidence as to the fact that the land of this case is land for which the transfer income tax is excessive, that is, land for which the plaintiffs do not self-definite, the disposition of this case is unlawful (the legislative intent of Article 104-3 of the former Income Tax Act and Article 168-8 (2) of the Enforcement Decree of the same Act is to restrict real estate speculation by imposing capital gains tax on the transfer income tax if the land is used as a means of property increase without using it for a productive purpose according to the actual demand, so that the transfer income tax should be imposed on the transfer margin of land of this case, forest, stock farm, stock farm, and land for non-business and miscellaneous land for the purpose of stabilizing the real estate market by suppressing speculative demand and thoroughly recovering speculative profit by applying a single tax rate of 60%, not a general transfer income tax rate. However, as seen earlier, if it is acknowledged that the plaintiffs were self-definite farmers from the land of this case, even if the plaintiffs have other occupation and own farmland other than the land of this case, it is inappropriate).

3. Conclusion

Therefore, the plaintiffs' claims of this case shall be accepted for the reasons, and the judgment of the court of first instance is unfair with different conclusions. It is so decided as per Disposition by the assent of all participating Justices on the revocation of the judgment of the court of first instance and the cancellation of the disposition of this case.