Changwon District Court-2016-Gu Partnership-595 (Law No. 18, 2017.07.18)

It is reasonable to authorize direct cultivation only if the ratio of his/her own labor, except for his/her family members, etc., during the entire farming work is at least 1/2.

The ‘direct cultivation of farmland' that meets the requirements for reduction and exemption from the transfer tax for 8 year self-farmland and 3 year farmland substitute land is a direct cultivation of a person who is engaged in part for reasons of having other occupation, etc. only when the ratio of labor force of ‘self-owned' except for family members, etc. during the entire farming work is not less than 1/2, and the transferor must prove it.

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

Busan High Court (Capwon) 2017Nu1148 Revocation of Disposition of Imposing capital gains tax;

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April 25, 2018

May 30, 2018

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s disposition of imposition of capital gains tax of KRW 89,260,940 against the Plaintiff on August 5, 2015 is revoked.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

The court's explanation on this part is the same as the corresponding part of the judgment of the court of first instance. Thus, this part is cited by Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) On December 2005, the Plaintiff, along with the Gangnam, cultivated the instant farmland as dry field by cutting it into a spouse around December 2005. On March 2006, the Plaintiff planted 450 seedlings, 450 tin trees, 50 tin trees, 50 tin trees, 50 jus, 20 jus, 50 jus, and 20 jus, and cultivated in the remainder of the farmland in a scma, bean, and quass. Accordingly, the Plaintiff met the requirements for capital gains tax reduction under Article 69(1) of the former Restriction of Special Taxation Act, since the Plaintiff cultivated 1/2 or more of the instant farmland with his own labor for over eight years.

this case’s disposition imposing capital gains tax is unlawful.

2) The Plaintiff, along with the spouse’s strongCC, assigned the instant farmland to the Plaintiff for more than three years. At that time, the Plaintiff acquired the instant substitute farmland, satisfying the requirements for reduction and exemption of capital gains tax under Article 70(1) of the former Restriction of Special Taxation Act. Nevertheless, the instant disposition imposing capital gains tax on the Plaintiff is unlawful.

B. Relevant legal principles

1) According to Article 69(1) of the former Restriction of Special Taxation Act and Article 69(1) and Article 69(1) and (4) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 25211, Feb. 21, 2014) of the same Act, with respect to income accruing from the transfer of land "direct farming" by the method prescribed by Presidential Decree for not less than eight years from the time the resident residing in the location of the farmland acquires the land to the time of transfer, the tax amount equivalent to 10/100 of the capital gains tax shall be reduced or exempted, and pursuant to Article 70(1) of the same Act and Article 67(1) and (3) of the Enforcement Decree of the same Act, if the resident living in the location of the farmland transfers the land, and acquires new farmland and cultivates it for not less than three years, income accruing from the farmland substitute land is also defined as 10/100 of the capital gains tax as being reduced or exempted, or 2/100 of the farmer's own or own plants.

In light of the literal meaning and the developments leading up to the enactment of the above provisions, whether a "direct farming" of farmland and farmland meeting the requirements for reduction or exemption of capital gains tax on the farmland of 8 years and 3 years is deemed to have been cultivated directly by a person engaged in agriculture regardless of his/her own labor ratio, and it is reasonable to determine that a person engaged in agriculture has been cultivated directly only in cases where the ratio of his/her "self" except for his/her family members, etc. during the entire farming work is not less than 1/2.

2) Even if the fact that the land has been cultivated as farmland is recognized, it is not presumed that the owner of the land has a minor fact, and the fact that the land has been cultivated as farmland must be attested by the transferor who asserts such fact (see, e.g., Supreme Court Decisions 92Nu11893, Jul. 13, 1993; 94Nu96, Oct. 21, 1994).

C. Determination

1) On June 26, 2014, the Plaintiff couple filed an application for reduction or exemption of capital gains tax under Article 69(1) of the former Restriction of Special Taxation Act with the Defendant on the ground that the Plaintiff’s husband and wife applied for reduction or exemption of capital gains tax under Article 69(1) of the former Restriction of Special Taxation Act for the transfer of the instant farmland for at least eight years. The fact that the Defendant reduced or exempted capital gains tax on the ground that it is the reduction or exemption of capital gains tax on farmland

Furthermore, according to Gap evidence Nos. 5, 11, 12, Eul evidence Nos. 7, 8, and 9, evidence Nos. 7, 8, and 9, testimony of the first instance court witness EE and HuF, GangwonCC operated a mutual vessel parts manufacturing business of "II" at the time of "JJ", "GJ", and "GG reading room" in the farmland of this case, and obtained business income and wage and salary income (in the GG reading room, it seems that the reading room was managed from 8 A.M. to 1 p.M.). As such, it is recognized that the time to engage in various kinds of projects and the plaintiff cultivated the farmland of this case.

2) However, in full view of the following circumstances acknowledged by each of the aforementioned evidence and evidence as above, Gap evidence Nos. 18, 25, Eul evidence Nos. 2, 5, 10 through 19, and 21 through 25, it is insufficient to view that the plaintiff cultivated or cultivated not less than half of the farming work with his own labor for eight or three years before transferring the farmland of this case, and there is no other evidence to prove otherwise.

① As seen earlier, “direct farming” is deemed to have been cultivated directly by a person engaged in agriculture regardless of his/her own labor ratio. However, it is reasonable to determine that a person engaged in agriculture is directly cultivated only when he/she is not engaged in agriculture at least 1/2 of his/her own labor ratio, excluding his/her family members, etc. during the entire farming work. Therefore, in cases where the couple is not engaged in agriculture at all times, but is engaged in part with other occupation, it is reasonable to determine “direct farming” only in cases where the couple is one-half or more of his/her own labor ratio even if he/she is the husband or wife.

② From June 15, 2007, the Plaintiff is the representative director of KK-dong 1121-2, HH (hereinafter referred to as “H”). H H reaches 14 commercial buildings leased in 2015, as indicated in the following table, the amount of income from 2010 to 2014 exceeds KRW 20 million each year; the Plaintiff’s labor income from 200 million to 2014 from 2009 to 2014 also amounts to KRW 36 million to 58 million.

Although the Plaintiff asserts that Hah L was actually in charge of the management of Hah building as a management director of Hah, and that himself was mainly in charge of the business during which time and effort such as issuance of tax invoices, collection of rent, delivery of management fee notice, etc., the Plaintiff’s assertion is insufficient to accept the Plaintiff’s assertion on the basis of each description of 14, 18 evidence, and testimony of HuF of the first instance trial witness. Even if the Plaintiff’s assertion was true, it is reasonable to transfer the business claimed by the Plaintiff in light of the size of H building, number of leased commercial buildings, etc.

③ In 2008, the Plaintiff served as the president of the KR Women's Self-Governing Council, a non-profit corporation, and thereafter participates in the operation of the KR Women's Self-Governing University, multi-cultural menting projects, various monthly meetings, workshops, special lectures, events, etc. In addition, the Plaintiff has been engaged in political activities, such as going out of the local election that was held on May 31, 2006 as a member of the KR City Council. At the time of the Plaintiff's pro rata, the Plaintiff is working as the women's policy development committee, the MFM Foundation's founder, and the YMCA operation committee (Evidence No. 17). Since 2012, the Plaintiff is engaged in active social activities, such as running as an advisory member of the NNNN Consultation Council (No. 17).

④ At the time of the Plaintiff’s farmland ledger (No. 9) as of April 10, 2014, the Plaintiff and KangCC stated that the Plaintiff owned a total of 13,327.6 square meters of the said land, including the instant farmland, with a total of 12 parcels of land, including 201-2,828 square meters and 13,327.6 square meters. Moreover, as of March 19, 2015, the Plaintiff’s confirmation letter of registration (registration of title 5-2) of the agricultural business entity (registration of title 5-2) of the Plaintiff’s agricultural business entity (registration of title 874-12, and 14,202 square meters, 9,212 square meters in total, and 202 square meters in the said land, and the Plaintiff’s assertion that there were 25 square meters in the said land and 38-2,000 square meters in total, excluding 37,000 square meters in the said land and 2582,02.

⑤ The Plaintiff asserts that, in the farmland of this case, the returned seedlings were 450 weeks, 50 weeks, 50 weeks, 50 weeks, and 20 weeks in each room were planted, and that, in the remaining spaces, the Plaintiff cultivated spana, bean, spats, etc.

However, return is rare and more economical compared to pine trees, while the production process of seeds requires more complicated procedures than other species of trees, and the production technology of seedlings is required (Evidence No. 19). Other crops also need various kinds of operations, such as the purchase of seeds, tree species, water atmosphere, management, management, drilling, plant operations, pest control, blight prevention, and harvest (Evidence No. 20 to 24). It is difficult to view that the Plaintiff, who is engaged in active social activities, could have cultivated or cultivated 1/2 or more of the farming work with his own labor.

④ Of the evidence submitted by the Plaintiff, Gap evidence No. 7 is the purchase details of pine trees at the time of acquiring the farmland in this case in 2006, and Eul evidence No. 10 cannot be deemed as direct evidence as to whether the Plaintiff “direct farming” of the farmland in this case due to the details of selling pine trees return, etc. around the time of the transfer of the farmland in this case. The evidence No. 9 is most the purchase details of agricultural materials in the name of Gangnam, and Gap evidence No. 16, 17, and 21 is merely the first transaction date as the purchase details of various agricultural materials in the name of the Plaintiff after the transfer of the farmland in this case on October 2013 and it is insufficient to prove “direct farming” of the Plaintiff for eight or three years prior to the transfer of the farmland in this case. Considering that HuF merely worked in GG Germany from April 2013 to January 2014, 201, EEF’s testimony is insufficient to prove the Plaintiff’s testimony in the first instance trial.

4. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and since the judgment of the court of first instance is unfair with different conclusions, the defendant's appeal is accepted and the plaintiff's claim is dismissed. It is so decided as per Disposition.