Busan District Court-2012-Gu Partnership-5122 ( October 24, 2013)

Seocho-2012- Busan District Court-2304 (Law No. 17, 2012)

If it is merely an indirect management of agriculture with focus on other jobs, it is justifiable to deem it as an independent competition.

(As in the judgment of the court of first instance, even if a person concurrently engages in another occupation, he/she shall be a self-employed farmer, but if he/she indirectly engages in the agriculture, referring to the other occupation, he/she shall not be deemed a self-employed farmer.

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

Busan High Court 2013Nu3078

1.A 2. MaximumB

○ Head of tax office

Busan District Court Decision 2012Guhap5122 Decided October 24, 2013

September 24, 2014

November 0, 2014

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance court is revoked. The defendant revoked both the imposition of the principal capital gains tax for the year 2010 on March 2, 2012 against the plaintiff Cho Jae-A, the imposition of the imposition of the principal capital gains tax for the year 2010, the imposition of the penalty tax for the capital gains tax for the year 2010 on April 1, 2013, the imposition of the principal tax for the capital gains tax for the year 2010, the imposition of the principal tax for the capital gains tax for the year 2010, and the imposition of the additional capital gains tax for the capital gains tax for the April 1, 2013.

1. Details of the disposition;

“A. On April 15, 2002, Plaintiff ChoA acquired the ownership of O-dong O-dong 1489-2 3,035 square meters (hereinafter “instant land”). The said land was transferred to the CCC on December 9, 2010; (b) Plaintiff LB (C’s wife) on November 8, 199, O-dong 1492-18 m2, 1492-19 m2, 1,983 m2, OO-dong 1,983 m2, 34-241 m2, 205 m25 m2, 205 m25 m2, 201 m2, 1492-19 m2, 1,983 m2, 201 m2, 304 m25 m25 m2, 205 m25 m2.

C. On February 28, 2011, the Plaintiffs filed an application for reduction or exemption of capital gains tax pursuant to Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 11232, Jan. 26, 2012; hereinafter the same shall apply) on the ground that Plaintiff Cho Jae-A filed a report on the tax base of each capital gains tax on the land Nos. 1 and 2 of this case for at least eight years. However, on March 2, 2012, the Defendant did not apply the said reduction or exemption provision on the ground that the Plaintiffs did not directly cultivate the land No. 1 and 2 of this case for at least eight years, but instead, applied the said reduction or exemption provision on the ground that Plaintiff Cho Jae-A did not directly cultivate the land of this case for at least eight years.

D. On May 9, 2012, the Plaintiffs appealed to the Tax Tribunal for the revocation of each of the above dispositions, but all of the claims were dismissed on July 17, 2012.

E. On April 1, 2013, when the lawsuit of this case was pending, the Defendant revoked ex officio the portion of the penalty tax in each of the above dispositions, and subsequently imposed the same amount on the Plaintiffs by clarifying the type of each additional tax and its calculation basis (hereinafter “each of the above dispositions of this case”) (hereinafter “each of the disposition of this case”), including imposition of principal income tax on the Plaintiffs as of March 2, 2012, and imposition of additional tax on each of the transfer income tax on April 1, 2013).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2 (including provisional numbers; hereinafter the same shall apply), Eul evidence Nos. 1 through 6, 15, and 16, the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

1) The Defendant illegally fabricated the certificates of Gangwon and thereby rendered each of the instant dispositions based on this. This constitutes a violation of the principle of good faith under Article 15 of the Framework Act on National Taxes and an abuse of the authority to conduct tax investigations under Article 81-4 of the same Act

2) The meaning of "direct cultivation" under Article 69 (1) of the former Restriction of Special Taxation Act is not a small, lease, or consignment management, but a case where a person is employed and cultivated under his/her own account and responsibility. Article 66 (13) of the Enforcement Decree of the same Act, which provides different contents, shall be deemed as an literary and exemplary provision, or it is null and void as it goes beyond the limit of delegated legislation, contrary to the constitutional economic order.

3) The Defendant must prove that the Plaintiffs did not directly cultivate the land Nos. 1 and 2 of this case. The Defendant failed to prove this.

Therefore, each disposition of this case is unlawful.

B. Relevant statutes

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

C. Determination

1) Whether the procedure for tax investigation is unlawful

According to Article 15 of the Framework Act on National Taxes, when a tax official performs his/her duties in good faith and sincerity, and according to Article 81-4 (1) of the same Act, a tax official shall conduct a tax investigation to the minimum extent necessary to realize appropriate and fair taxation, and shall not abuse his/her right of investigation for any other purpose.

The plaintiffs asserted that the contents of the above written confirmation (Evidence 8) that the defendant's tax officials found the KimE, which is the wife of the DoD and prepared in advance between the defendant's DoD without the DoD, and that KimE written and sealed the DoD's signature and seal, and that KimE written the name of the DoD and affixed the seal without the permission or confirmation of the contents of the DoD. Thus, the plaintiffs asserted that the above written confirmation (Evidence 8) that the Doddd's Dod's Dod' was fabricated for a considerable period after acquiring the land of this case

The testimony of Gap evidence Nos. 7 and 8, which correspond to the plaintiffs' assertion, and some testimony of Gap evidence Nos. 7 and 8 of the first instance trial witness Does, the trial witness KimE, and ChoF, were signed and sealed without confirming the contents of documents submitted to tax officials. ② The part of the "acquisition" and the "PPB" among the contents of the above written confirmation is modified and confirmed, and it is difficult to view that it was made in advance. ③ The witness Kim E-E also prepared the statement of witness at the relevant place, "No. 8 was prepared in advance by the staff of the tax office," and "No. 8 was prepared in that place," and the statement of confirmation (No. 8) was prepared in that place, and ④ it is difficult for tax officials to find the contents of the above written confirmation to the effect that there was no evidence that all of the witness evidence of the first instance trial, this case No. 1 and No. 1 and No. 2 after this case were fabricated, but there was no other evidence to prove that the above real estate was conducted within dry field.

Rather, comprehensively taking account of the partial descriptions of the evidence Nos. 7 and 8, the testimony of the witness II of the first instance trial, and the testimony of the witness of the first instance trial, the witness of the first instance trial, and the purport of the entire pleadings, the above written confirmation can only be acknowledged that even though the above written confirmation was not directly prepared by Doddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddd

Therefore, this part of the plaintiffs' assertion is without merit.

2) The meaning of "direct cultivation"

A) According to Article 104-3(1)1 of the former Income Tax Act (amended by Act No. 10924, Jul. 25, 201); Articles 168-6 subparag. 1 and 168-8(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23723, Apr. 13, 2012; hereinafter the same), and Article 2 subparag. 5 of the Farmland Act, farmland owner is farmland, the farmland owner of which does not reside in the farmland for a given period, or does not own farmland, and land is subject to capital gains tax by applying the tax rate of 60/100 of the tax base for non-business. The scope of farmland not cultivated by himself/herself is determined to be farmland excluding farmland self-major under Article 2 subparag. 5 of the Farmland Act.

In addition, Article 69(1) of the former Restriction of Special Taxation Act, Article 66(1) and Article 66(13) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23718, Apr. 10, 2012) provide that in order for the transferor to be eligible for reduction or exemption of capital gains tax, the transferor shall be recognized to have resided in a Si/Gun/Gu where the farmland is located or a Si/Gun/Gu adjacent thereto, or a Si/Gun/Gu where the farmland is located and cultivated directly for not less than 8 years from the time of acquisition until the time of transfer, and "direct cultivation" means that the transferor is engaged in cultivating crops or growing perennial plants on his/her own farmland or cultivating or growing them with his/her own labor.

Meanwhile, Article 2 subparagraph 5 of the Farmland Act (amended by Act No. 4817 of Dec. 22, 1994) provides that "self-cultivation" refers to a farmer who is engaged in cultivating crops or growing perennial plants in his/her own farmland at all times, or growing or growing at least half of farming work with his/her own labor, or an agricultural corporation cultivates crops or growing perennial plants in its own farmland.

B) As above, Article 69(1) of the former Enforcement Decree of the Restriction of Special Taxation Act delegates a specific scope to Presidential Decree by declaring the land directly cultivated for at least eight years as the object of exemption from capital gains tax. Article 66(4) through (8) of the Enforcement Decree of the same Act provides for the subject of exclusion from the farmland cultivated by himself/herself for at least eight years, and Article 2(13) provides for embodying the meaning of "direct cultivation" with the same content as that of subparagraph 5 of Article 2 of the Farmland Act. Thus, Article 66(13) of the former Enforcement Decree of the Restriction of Special Taxation Act does not include any provision on delegation or any provision on invalidation as it goes beyond the limit of delegated legislation (see, e.g., Supreme Court Decisions 2010Du8423, Sept. 30, 2010; 2013Du16531, Dec. 12, 2013).

C) In addition to the above provisions of the relevant Acts and subordinate statutes, ① the former Enforcement Decree of the Income Tax Act requires the application of the provisions on the ‘self-Cultivating' under Article 2 subparag. 5 of the Farmland Act. The scope of land subject to direct cultivation as prescribed by the former Restriction of Special Taxation Act, which is completely reduced or exempted from the capital gains tax, is consistent with the prior meaning of ‘self-Cultivating'. ② The name of Article 69 of the former Restriction of Special Taxation Act includes the expression of ‘self-Cultivating' as ‘taxation reduction or exemption from the capital gains tax'. ③ The legislative history of the above provision includes the following cases: (i) the owners of farmland who are not subject to heavy taxation; (ii) the owners of the farmland who are not subject to heavy taxation; and (iii) the provision on the ‘self-Cultivating' under Article 5 subparag. 6 (d) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 193) which directly purchased the farmland for more than 8 years and the provision on the capital gains tax exemption for 16 years or more.

3) The burden of proof

Pursuant to the above relevant provisions, the burden of proving the fact that the transferred land had been cultivated directly for not less than eight years while residing in the location of the land (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002) is a taxpayer who asserts exemption of capital gains tax pursuant to the relevant provision.

Inasmuch as the Plaintiffs stated in the farmland ledger that they own the land Nos. 1 and 2 of this case, the burden of proof is converted, and the Defendant asserts that the Plaintiffs have not cultivated the land Nos. 1 and 2 of this case. However, the case where a farmland ledger is prepared only formally for the purpose of various tax reduction and exemption, and considering the fact that an administrative agency’s actual examination of the farmland ledger was not sufficient, the burden of proof can not be deemed to be converted solely based on the entry in the farmland ledger.

Therefore, this part of the plaintiffs' assertion is without merit.

4) Comprehensively taking into account whether the plaintiffs directly cultivated the land of this case, Gap evidence Nos. 3 through 6, Eul evidence Nos. 13 and 14, and the purport of the entire pleadings, the farmland ledger prepared by the head of OO-gu O-B shall include the land of this case, the plaintiff ChoA shall purchase the land of this case, the plaintiff ChoB shall purchase the land of this case, and the plaintiff ChoB shall purchase the land of this case, respectively. The plaintiff ChoA shall recognize the fact that the total of 2007 OO, the total of 2008 OO, OOOOO, the total of 209, OOOOOO, the total of 201, the total of 2009, the total of 10OOOOOOO, the total of 2009, the total of 10OB, the total of 2010 OB materials purchased from 201, 201, 2016 OB.K.

However, in full view of the following circumstances, evidence No. 2, evidence No. 7, evidence No. 11, 12, and 17 of the evidence No. 7, evidence No. 17 of the court of first instance, evidence No. 1 and evidence No. 2 of the testimony of the court of first instance, and evidence No. 1 and No. 2 of the testimony of the court of first instance, which can be acknowledged by comprehensively considering the overall purport of the pleadings, are hard to believe that the plaintiffs directly cultivated the land No. 1 and No. 2 of the court of first instance for at least eight years prior to the date of transfer, and the above facts alone are insufficient to recognize them, and there is no other evidence to acknowledge them.

① 원고 조AA는 1980. 4. 18.부터 2009. 2. 28.까지 OO고등학교에서 교사로 근무하면서 2006. 8. 11.부터 'PPP 잡화'라는 상호로 잡화점을 운영하였고, 2009. 7. 1.부터는 '주식회사 PPP해장국'의 대표이사로 등재되기도 하였으며, 원고 최BB는 이 사건 제2 토지를 소유하고 있던 기간 동안 'PPP해장국'(2곳), 'QQQ전문점', 'RRR' 등의 상호로 여러 음식점을 운영하였으므로, 원고들이 직접 농작업에 종사할 수 있는 가용 시간은 그리 많지 않았을 것으로 보인다.

② Since 2007, Plaintiff Cho Jae-A submitted the details of purchase of agricultural materials, such as agricultural chemicals since 2009, and Plaintiff ChoiB did not submit any evidentiary materials regarding the disbursement of the expenses incurred in farming operations.

③ The plaintiffs asserted that dry field farming was made after embling rice plants since they were first fed in the land of this case. However, the embling time itself seems to have been since 205 when the plaintiffs' claim was made. On the other hand, the first instance court witness Hah and Lee GG, which were residing in the vicinity of the land of this case or engaged in agriculture, made a statement that the plaintiffs were dembd's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's demb's d's d'.

⑤ The size of the land No. 1 in this case is 3,035 square meters, and the total size of the land No. 2 in this case is 6,978 square meters (61 square meters + 1,983 square meters + 93 square meters + 2,079 square meters + 2,162 square meters) and is not a full-time farmer (in direct cultivation, the Plaintiffs reported the purchase of the land in this case on December 1, 2010, which was before the transfer date of the land No. 1 and 2, and the Plaintiffs did not submit objective evidentiary materials to recognize that the Plaintiffs had possession of any agricultural machine before the purchase of the above farmland (the testimony of the witness M in the first instance trial and the witness F in the trial before the purchase of the above farmland). Thus, each testimony of the Plaintiffs is difficult to submit evidentiary materials during the process of the tax trial to the date of closing argument without submitting any evidentiary materials.

(6) In light of the above facts such as the preparation of the farmland ledger, only if the plaintiffs stated in the farmland ledger that they own the land Nos. 1 and 2 of this case, the fact that the plaintiffs directly cultivated the land Nos. 1 and 2 of this case cannot be viewed as a matter of course.

Therefore, all of the plaintiffs' arguments premised on the direct cultivation of land Nos. 1 and 2 of this case are without merit, and each of the dispositions of this case is legitimate.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed in its entirety due to the lack of reasonable grounds, and the judgment of the court of first instance is just, and the plaintiffs' appeals are dismissed in its entirety on the grounds that they are without merit.