Suwon District Court 201Gudan745, 2011

Cho High Court Decision 2010Du3404 ( October 17, 2011)

There is no evidence to deem that the farmland is subject to reduction and exemption as of the transfer date.

Comprehensively taking account of the fact that the land was illegally changed due to the change of the form and quality of the site after the lease, etc., and was used as a place of business for the collection and sale of waste resources, and that the land was not used as farmland, it cannot be deemed that the land was not farmland at the time of the transfer, but the land was temporarily closed, considering the fact that the

Article 69 of the Restriction of Special Taxation Act

2011Nu28341 Revocation of disposition of imposing capital gains tax

Ministry of Foreign Affairs

Head of Namyang District Tax Office

Suwon District Court Decision 2011Gudan745 Decided July 18, 2011

May 30, 2012

July 11, 2012

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. The imposition of capital gains tax of KRW 000 on October 1, 2010 against the Plaintiff on October 1, 201 shall be revoked.

1. Details of the disposition;

A. On June 23, 1973, the Plaintiff completed the registration of ownership transfer on the ground of sale with respect to the O-dong 000 O-dong 1,949 square meters (hereinafter “instant land”).

B. On December 15, 2009, the Plaintiff transferred the instant land to DaD and one other, and applied the provision on reduction and exemption of capital gains tax for at least eight years by applying the reduction and exemption of capital gains tax applicable to the transfer of self-Cultivating farmland with the amount of KRW 000, acquisition price of KRW 00 to the Defendant and KRW 000.

C. The Defendant excluded capital gains tax exemption on the ground that the instant land was not farmland at the time of transfer, and imposed capital gains tax of 000 won on the Plaintiff on October 1, 2010.

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 12, 2010, but was dismissed on February 17, 201.

[Reasons for Recognition] The facts without dispute, Gap evidence 1, 2, and 10 (including household numbers, hereinafter the same shall apply), Eul evidence, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In light of the fact that the instant land was restored to farmland at the time of the transfer and is recognized as farmland being temporarily closed by the competent authorities and is permitted to engage in land transaction, etc., the instant land constitutes farmland subject to reduction and exemption from the present farmland. In other words, the instant disposition is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) After acquiring the instant land on June 23, 1973, the Plaintiff continued to grow for more than 30 years, and leased the instant land to E on March 2004, and E used the instant land as a pet dog breeding house.

(2) On October 2007, the Plaintiff leased the instant land to the KF, and the KF used the instant land as a place of business collecting and selling waste resources until November 2009.

(3) On December 7, 2006, the Plaintiff was convicted of violating the Act on Special Measures for Designation and Management of Areas subject to Development Restriction due to illegal changes in the form and quality of the instant land.

(4) On May 22, 2009, the Plaintiff entered into a sales contract with DaD et al. and 1 other parties on the instant land, and agreed to return the present state to farmland before the land transaction permission was granted.

(5) According to the Land Transaction Permit issued on December 10, 2009 by the Namyang-ju Market, the land category of the instant land is written as “the answer” or “the reality”, and the purpose of its use is written as “agriculture”.

(6) According to the local identification sheet prepared by the Defendant, the instant land was investigated as follows: (a) it is difficult to access the land installed by the transferee as of July 21, 2010; and (b) the land is de facto grow up on the ground as the site; and (c) at the time, it is found as follows: (a) it is “the state in which various kinds of water, garbage, etc. are loaded in the site in the state of the site.”

[Ground of Recognition] The non-sured facts, Gap evidence 3, 4, and 8, and Eul evidence 2 through 5, and the purport of the whole pleadings

D. Determination

(1) According to Article 69(1) of the Restriction of Special Taxation Act (amended by Presidential Decree No. 10406, Dec. 27, 2010); Article 66 subparag. 1, 4, and 5 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22583, Dec. 30, 2010); and Article 27(1) of the Enforcement Rule of the same Act, in order for a transferor to be subject to reduction and exemption of income tax on his own farmland, it shall be recognized that the transferor has lived for not less than eight years between the time of acquisition and the time of transfer from the time of acquisition to the time of acquisition (see, e.g., Supreme Court Decision 98Nu2986, Jun. 29, 2008). Therefore, even if the public record land category is farmland, it is not actually used for cultivation as farmland, regardless of its land category on the public register as of the date of transfer, it shall be deemed that it is still 98.

(2) The evidence submitted by the Plaintiff (including the fact-finding results on the southyang market of this court) alone is insufficient to recognize that the land in this case constitutes farmland subject to reduction or exemption as of the date of transfer, and there is no other evidence to acknowledge it. The reasons are as follows. The Plaintiff’s use of the land in this case from the end of March 2004 to the end of November 2009 after renting the land in this case’s form and quality change due to the ground, etc., was used as a pet dog breeding house, and a waste resources collection and sale business place, and the Plaintiff’s temporary use of the land in this case’s situation from the end of 2004 to December 15, 2009 cannot be seen as having been used as farmland for more than five years, and the Plaintiff’s temporary use of the land in this case’s situation from the end of November 2009 to the point of view that it was inevitable for the Plaintiff to temporarily use the land in this case’s shape as at the time of sale.

3. Conclusion

The judgment of the first instance is justifiable. The plaintiff's appeal is dismissed.