Daegu District Court-2016-Gu Partnership-22812 (No. 24, 2017)

Cho High 2016Gu1955 (2016.07.04)

Fictitious temporary cultivation for exemption from capital gains tax is not subject to reduction or exemption from capital gains tax.

It is difficult to view that the instant land was temporarily in a state of temporary suspension, and even if the crops were in serious condition at the time of transfer, the disposition that excluded the Plaintiff from reduction or exemption because it was deemed that the temporary cultivation was disguised for exemption from capital gains tax at the time of transfer cannot be deemed farmland

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

Article 66 of the Enforcement Decree of the Restriction of Special Taxation

2017Nu4421 Revocation of disposition of imposing capital gains tax

○ ○

○ Head of tax office

Daegu District Court Decision 2016Guhap22812 Decided January 24, 2017

July 14, 2017

September 8, 2017

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. On February 2, 2016, the Defendant revoked the disposition of imposition of KRW 85,445,760, penalty tax of KRW 11,714,610, and penalty tax of KRW 11,714,610 for the Plaintiff.

1. Details of the disposition;

A. On April 12, 1988, the Plaintiff acquired 1,468 square meters (hereinafter “instant land”) prior to ○○○○-dong, ○○○-○○○, and completed the registration of ownership transfer for the instant land to Kim○○ on July 18, 2014, on the ground of sale on June 13, 2014.

B. The Plaintiff filed an application for reduction or exemption of capital gains tax under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter “Special Taxation Act”) with the Defendant on the ground that the Plaintiff’s “farmland for the transfer of the instant land was farmland with a self-fluence of not less than eight years” (hereinafter “the Restriction of Special Taxation Act”).

C. As a result of a regular audit conducted against the Defendant, the director of ○○○ Regional Tax Office pointed out and notified that the Plaintiff should be exempted from the application of capital gains tax reduction or exemption under Article 69 of the Restriction of Special Taxation Act on the transfer of the instant land as the Plaintiff did not cultivate the instant land directly. Accordingly, the Defendant denied capital gains tax reduction or exemption, and on February 11, 2016, issued a correction and notification of capital gains tax amounting to KRW 97,160,370 (including additional tax 11,714,610) for the Plaintiff (hereinafter “instant disposition”).

D. Accordingly, the Plaintiff filed an appeal with the Tax Tribunal on April 26, 2016, but the Tax Tribunal dismissed the Plaintiff’s claim on July 14, 2016.

Facts without any dispute over recognition, Gap evidence 1, 2, 14, Eul evidence 1 (including paper numbers; hereinafter the same shall apply), the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant land constitutes land directly cultivated by the Plaintiff for at least eight years, which is subject to capital gains tax reduction or exemption under Article 69(1) of the Restriction of Special Taxation Act. Therefore, the instant disposition imposing capital gains tax on the Plaintiff is unlawful.

1) On December 30, 1983, the Plaintiff purchased the instant land in the name of Na○, Dao, Hanam, and formed agricultural houses. On April 11, 1988, the Plaintiff continued to reside in the instant land even after completing the registration of ownership transfer under the name of the Plaintiff.

2) On May 20, 1993, it is necessary for ○○○○ to keep the building materials in custody, and around that time, he stored the building materials in part of the instant land, and continued to do so on the remaining part of the land. The time when ○○○○ used the entire instant land as a place of business related to the construction materials, he/she used the entire land as a place of business for the construction materials retail business, and expanding its business, and using the instant land as the place of business.

3) After that, following the Plaintiff’s transfer of ○○ Industries’s place of business from the instant land to another place upon the Plaintiff’s request, the Plaintiff began to cultivate a shoulder, bean, etc. after being delivered the instant land on December 1, 2013, and transferred the instant land to Kim○, a purchaser of the instant land until July 18, 2014.

4) Ultimately, the Plaintiff delivered the instant land to Kim○, a purchaser from December 30, 1983 to July 18, 2014 (around 30 years and 7 months), 20 years or more, the remainder of which was excluding the period from October 24, 2006 to November 201, 203, using the instant land as the place of the Japanese snow industry, for the period from July 18, 2014 (around 7 years and 1 months).

5) In addition, even if the instant land was used as a place where construction materials were loaded, the instant land was used as farmland at any time, and in fact, the Plaintiff transferred the instant land after being handed over from ○○○ on December 1, 2013, and then transferred it again, it should be deemed that the period during which the instant land was used as a place where construction materials were loaded is nothing more than that during which the land was used as a place where construction materials were loaded.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Relevant legal principles

Article 69(1) of the Restriction of Special Taxation Act provides that a tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted on income accruing from the transfer of land prescribed by Presidential Decree, among land directly cultivated by a resident prescribed by Presidential Decree who resides in the seat of farmland for at least eight years. The burden of proving the fact that a resident resided in the seat of farmland for at least eight years and directly cultivated the transferred land is the Plaintiff (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002).

2) Determination on the instant case

In full view of the following facts and circumstances, the evidence presented by the Plaintiff alone is insufficient to acknowledge the fact that the Plaintiff directly cultivated the land of this case for not less than eight years, and there is no other evidence to acknowledge it otherwise.

① Article 66(4) of the Enforcement Decree of the Restriction of Special Taxation Act provides that “The term “land prescribed by the Presidential Decree” means the land cultivated by himself for at least eight years from the time of acquisition until the time of transfer, excluding any of the following,” which is one of the following. As can be seen in the language and text of the above provision itself, there must be a fact that the Plaintiff purchased the instant land in the name of ○○, which is 1,00, 60, 1983, 198, 300, 198, 40,000,000,000,0000,0000,000,0000,0000,0000,0000,0000,0000,000,000,0000,0000,0000,000,0000,000,000,000.

② Even if the instant land was registered as the seat of the ○○○○ Materials Company, which was operated by ○○○○○, from May 20, 1993 to September 22, 2006, and as the seat of the ○○○○○○○ Industry, from October 24, 2006 to May 26, 2014, the instant land was registered as the seat of the ○○○○○○○○○○ Industry, respectively. In comparison with the instant land’s aerial photography and satellite photographs taken on the portal site, it is reasonable to view that the Plaintiff owned the instant land from 196, 200, 208, 209, and 209, to the point of view that the instant land was not directly used for the remaining 4-year period, 196, 208, 201, and 2014, which were registered as the seat of the instant land, as the total 4-year period of the instant land.

③ The Plaintiff asserts that he directly cultivated the instant land from December 1, 2013, which was the date of the lease of another place of business, to July 18, 2014, which is the date of the instant land transfer, from the date of December 1, 2013, the date of which the Plaintiff leased another place of business. As the Plaintiff’s assertion, the Plaintiff assumed that the instant land was directly cultivated from December 1, 2013 to July 18, 2014, and even if the period is added up to the cultivation period under the said paragraph (2), the said period

④ In light of the fact that the period from May 20, 1993 to September 22, 2006, and from October 24, 2006 to May 26, 2014, the Plaintiff leased the instant land to ○○○○ for the purpose of loading ○○○ materials, the period is about 20 years and 11 months (it is over 20 years, even if the Plaintiff was again handed over the instant land from ○○○○ on December 1, 2013), it is difficult to view that the instant land was temporarily in a state of suspension during the same period.

⑤ The confirmation of the fact that ○○○ and two persons, a farmer in the vicinity of the instant land, jointly signature (Evidence No. 5-1 of the Evidence No. 5), states that the Plaintiff had engaged in farming and fishing village for at least ten years from mid-1980 to mid-1990. However, in light of the fact that the Plaintiff acquired ownership of the instant land on April 12, 198, the Plaintiff cannot be found to have directly cultivated the instant land for at least eight years solely based on the record of the aforementioned confirmation document. The content of the recognition certificate (Evidence No. 5-2 of the Evidence No. 5-2) written by ○○ and six other persons jointly signature from April 2014 to October 2014, it is difficult to believe that the Plaintiff cultivated crops, such as bees, ancients, and shoulders, from the instant land to October 2014, which is contrary to the Plaintiff’s assertion and the purchaser of the instant land.

6) In addition, in light of the fact that the Plaintiff cultivated farmland other than the instant land in light of the fact that the Plaintiff cultivated farmland other than the instant land, the Plaintiff cannot be deemed to have proved that the Plaintiff directly cultivated the instant land for at least eight years on the certificate of registration of direct farming subsidies for dry field in 2014, or on the certificate of registration of direct farming subsidies for dry field in 2014, due to the fact that the instant land was registered as farmland subject to payment.

3) Sub-decisions

Therefore, the instant disposition imposing capital gains tax on the Plaintiff without tax reduction under Article 69(1) of the Restriction of Special Taxation Act is lawful ( insofar as there is no sufficient evidence to acknowledge that the Plaintiff directly cultivated the instant land for not less than eight years, even if the current status of the use of the instant land at the time of the transfer of the instant land was farmland as the Plaintiff’s assertion, the instant land does not constitute the subject of capital gains tax reduction).

3. Conclusion

Therefore, the claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just and therefore, the plaintiff's appeal is dismissed. It is so decided as per Disposition.