Cho High 2010Gu2519 ( October 24, 2011)

Since the establishment of a new provision of the Enforcement Decree stipulating the concept of ‘direct cultivation', it cannot be deemed that the case of cultivation by employing others can not be regarded as self-cultivation.

After the establishment of the enforcement decree that provides for the concept of "direct cultivation", it shall not be deemed that the case of employing and cultivating another person on his own labor force after the establishment of the enforcement decree, nor shall it be deemed that applying this provision from the case of transfer after the establishment of the new provision violates the principle of good faith and the principle of prohibition of retroactive taxation.

2012Nu1274 Revocation of disposition of imposing capital gains tax

XX Kim

Head of the Daegu Tax Office

Daegu District Court Decision 201Guhap3878 Decided May 23, 2012

October 26, 2012

November 16, 2012

1. The plaintiff's appeal is dismissed.

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

The decision of the first instance court is revoked. The defendant's disposition of imposition of KRW 000 of the transfer income tax for the year 2008 against the plaintiff is revoked, although the purport of the claim and appeal is stated as " July 5, 2010" but it appears to be a clerical error in the purport of the appeal.

1. Details of the disposition;

A. On March 5, 199, the Plaintiff acquired both 00-1 and 16,761m2 (hereinafter referred to as “the farmland of this case”) in Gyeongbuk-gun, Chungcheongnam-do and sold the price of KRW 000 to the largestA on May 27, 2008.

B. On July 31, 2008, the Plaintiff filed an application for reduction or exemption of capital gains tax pursuant to Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 9276 of Dec. 29, 2008; hereinafter the same shall apply) on the ground that he/she directly cultivated the farmland of this case for not less than eight years, upon filing a preliminary return of capital gains tax on the farmland of this case with the Defendant on July 31, 2008. On July 1, 2010, the Defendant denied the reduction or exemption of capital gains tax on his/her own farmland for not less than eight years against the Plaintiff on July 1, 2010, and at the same time denied special long-term possession deduction by deeming the farmland of this case as the land for non-business use and applied the heavy tax rate of capital gains tax (including additional tax) for the year 200 won.

C. On July 29, 2010, the Plaintiff filed an appeal with the Tax Tribunal on July 29, 201, but was dismissed on August 24, 201.

[Ground of recognition] Facts without dispute, Gap evidence I, 2, 3 evidence, Eul evidence No. 1, the purport of the whole pleadings

2. Summary of the plaintiff's assertion

A. Until the meaning of "direct cultivation" is defined by Presidential Decree No. 66 (12) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009), as being newly established by Presidential Decree No. 19329 of Feb. 9, 2006, the meaning of "direct cultivation" includes not only cases where the transferor cultivates 1/2 or more of 1/2 of her own labor force but also cases where another person is employed and cultivated under his own responsibility and account. The practice of the tax authorities has also been operated for the same purpose. The plaintiff acquired the farmland of this case with trust in the practice of the Supreme Court and the tax authorities, and acquired it, and managed the farmland of this case, etc. of this case for a considerable period of time, and thus, it is unlawful for the defendant to apply the former Enforcement Decree of the Restriction of Special Taxation Act to the acts of direct cultivation of this case to the taxpayer of this case.

F. If the definition of "direct cultivation" under the provision of the Enforcement Decree of this case applies to the cultivation activities before the establishment of the provision of this case, the provision of this case is null and void because it violates the principle of prohibition of retroactive taxation. As a result, the disposition of this case based on the provision of the Enforcement Decree of this case is unlawful.

C. The plaintiff employed headB and directly cultivated the farmland of this case for not less than 8 years. Thus, it constitutes the subject of exemption from capital gains tax, and the disposition of this case is unlawful.

3. Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

4. Determination

A. Judgment on the Plaintiff’s assertion

(1) According to Article 69(1) of the former Restriction of Special Taxation Act, the tax amount equivalent to 100/100 of the transfer income tax on the income accrued from the transfer of land prescribed by the Presidential Decree, among the land which is subject to the agricultural income tax, which is the land directly cultivated for eight or more years by a person residing in the location of such land. Article 66(12) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009), which is the provision of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19329 of Feb. 9, 2006), is newly established as of February 9, 2006. Accordingly, the term "direct cultivation" refers to the case where a resident engages in the cultivation of the agricultural products or perennial plants, or cultivates or cultivates with his own labor at least half of the farming work. According to Article 19329, Article 206 of the former Enforcement Decree of the Restriction of Special Taxation Act.

Before the enactment of the enforcement decree of this case, the former Enforcement Decree of the Restriction of Special Taxation Act does not separately stipulate the concept of "direct farming", which is one of the requirements to be exempted from capital gains tax, and at that time, the Supreme Court has interpreted that the meaning of "direct farming" includes not only cases where the transferor cultivates trees but also cases where the transferor employs another person and cultivates them under his responsibility and account (see, e.g., Supreme Court Decision 2003Du2465, May 30, 2003; Supreme Court Decision 94Nu96, Oct. 21, 194).

However, in full view of the following: (a) the newly established enforcement decree of this case clearly provides that “a farmer shall cultivate more than 1/2 of his/her own work with his/her own work force”; and (b) the legislative intent of the newly established provision is unclear that the concept of “in cases of a farmer’s work under his/her own responsibility,” which is interpreted in the previous Supreme Court precedents, and thus, to address the problem of reduction and exemption of capital gains tax without actually engaged in farming; (c) the meaning of the above “self’s work” cannot be deemed to include the case where another person is employed under his/her responsibility and calculation, such as the existing precedents; and (d) the interpretation of the enforcement decree of this case meets the requirements of “direct farming” (see, e.g., Supreme Court Decision 2010Du8423, Sept. 30, 2010).

(2) In order to apply the principle of trust and good faith or trust protection in tax-related relations, the tax authority should first issue a public opinion to taxpayers, second taxpayer should trust and act in accordance with the public opinion list, third taxpayer should not be responsible for the failure to pay taxes. Fourth, the tax authority's new disposition against the opinion already expressed, which would result in a violation of the taxpayer's interest.

However, at the time of the Plaintiff’s acquisition of the farmland in this case, it is interpreted and applied including cases where the Defendant employs and cultivates another person under his responsibility and calculation, and the meaning of “direct farming” was excluded from the above cases, unlike the previous cases, and thus, the instant disposition was taken against the Plaintiff by interpreting and applying the capital gains tax accordingly. However, it would result in the interpretation and application of the law by newly establishing the provisions of the Enforcement Decree of this case, which clearly state the meaning of “direct farming”, and it would not result in any new disposition contrary to the opinion expressed in violation of the legal principles of Geum-dae, which is the tax authority’s public opinion as to the interpretation and application of the tax law, and thus, the principle of good faith and trust protection cannot be applied to the instant disposition (see, e.g., Supreme Court Decisions 8Nu11957, Sept. 29, 198; 8Nu1681, Sept. 16, 198).

Therefore, the Plaintiff’s assertion that the instant disposition was unlawful due to its violation of the principle of trust and good faith and trust protection.

B. Judgment on the Plaintiff’s assertion

The principle of retroactive taxation prohibition, one of the basic principles of tax law, refers to the principle that a tax obligation is imposed retroactively by a new tax law after its establishment with respect to income, profit, property, act or transaction in which a tax obligation is established (Article 18(2) of the Framework Act on National Taxes). Thus, in a case where a tax obligation is established after the enactment or amendment of the tax law, this principle is not applicable (see, e.g., Supreme Court Decisions 88Nu1957, Sept. 29, 1989; 2001Du10790, Mar. 26, 2004).

However, since the obligation to pay capital gains tax on the transfer of real estate becomes effective after the transfer of real estate, Article 10 of the Addenda of the Restriction of Special Taxation Act provides that the provisions of the Enforcement Decree of this case shall apply from the transfer after February 9, 2006, which is the enforcement date thereof, so the provisions of the Enforcement Decree of this case shall not be deemed to be invalid in violation of the retroactive taxation principle, and the obligation to pay capital gains tax on the transfer of the farmland of this case shall not have been established before the enforcement date of the provisions of the Enforcement Decree of this case, but shall be established only after the transfer of the farmland of this case after May 27, 2008, which is after the enforcement date of the provisions of the Enforcement Decree of this case. Thus, even if the defendant issued the disposition of this case where he did not recognize the plaintiff's direct cultivation and could have been subjected to tax reduction or exemption by applying the provisions of the Enforcement Decree of this case, it shall not be deemed to have violated the principle of retroactive taxation prohibition (see, e.g., Supreme Court Decisions 8Nu19898.

Therefore, we cannot accept this part of the plaintiff's assertion.

C. Judgment on the Plaintiff’s assertion

(1) The principle of strict interpretation derived from the principle of no taxation without law is applicable not only to the cases meeting the taxation requirements, but also to the cases meeting the requirements for non-taxation and tax reduction and exemption. As such, extended interpretation or analogical interpretation of the requirements for non-taxation or tax exemption and exemption as favorable to taxpayers without any justifiable reason causes a result contrary to the principle of no taxation, which is the basic ideology of the tax law, and thus, it is not allowed (see, e.g., Supreme Court Decision 2005Da19163, May 25, 2006). The assertion of farmland is liable to prove it (see, e.g., Supreme Court Decision 92Nu1893, Jul. 13, 199

(2) In light of the following circumstances, it is insufficient to recognize that the Plaintiff was engaged in cultivating crops or cultivating 1/2 or more of the farming work with his own labor for 8 years or longer, and there is no other evidence to acknowledge this differently. Accordingly, the Plaintiff’s assertion on this part is without merit. In light of the following circumstances, the Plaintiff’s assertion on this part is without merit.

(A) From April 27, 1981, the Plaintiff operated YY Co., Ltd. (OO) companies in the Gannam-gun-si fishing period located in Y00-37, and from December 1, 1993 to December 1, 1993, the Plaintiff operated YY from around 1992 to around 200 won per annum. The above company Y also has an overseas local corporation from around 1992 to around 200 won per annum from around 2004 to around 2008. The amount of corporate tax revenue on each company’s corporate tax return from around 200 to around 200 won per annum; the Plaintiff’s salary from each of the above companies from around 204 to 2008 to around 00 won per annum.

(B) On the farmland of this case, approximately 850 m3 (16,761 m2), which was planted in 16,761 m2. From around October 2000 to around 18,005, the Plaintiff employed headB from around 07:30 to around 18:00 each day, with the exception of Sundays, managed the field work, miscellaneous removal, etc. of the above trees planted in the farmland of this case, and paid KRW 00 per month in return. However, during the winter season, she paid KRW 00 per week to the headB and entrusted the management of the above trees. During the management of the trees of this case, she visited the farmland of this case at least 4,5 times per month on average to YB and removed the farmland of this case.

(C) After November 2005, the head of B only managed the trees of the farmland of this case. However, according to the certificate of proof of entry into and departure from Korea (Evidence No. 11) against the Plaintiff, the Plaintiff’s monthly number of days of overseas stay is about 23 days after 2005, and the number of days of stay in Korea is about 7 days a month average, it is difficult to accept the Plaintiff’s above assertion in light of the empirical rule even considering the Plaintiff’s status of domestic business management, the size of the farmland of this case, the number of trees planted, the number of trees planted, the previous number of days of farming in the head B, etc., as seen earlier, considering the receipt and management level of trees claimed by the Plaintiff, even if the Plaintiff had not less than 1/2 of the farming work of the farmland of this case after November 2005, the Plaintiff cannot be deemed to have managed the farmland of this case for about 9 years after the Plaintiff owned the farmland of this case.

5. Conclusion

Therefore, the plaintiff's claim of this case is dismissed due to the lack of reason, and the judgment of the court of first instance is just and there is no ground for appeal of the plaintiff, and it is so dismissed as per Disposition.