Seoul Administrative Court 2015Gudan62340 ( October 10, 2017)

Whether it falls under non-business land

In determining whether to grant a special long-term holding deduction of the former Income Tax Act, the land actually used for cultivation without relation to the land category of the land shall be deemed farmland, and since the land of this case can be recognized that it is the land mainly used for cultivation, the land of this case constitutes the land for non-business use.

Article 104-3 of the Income Tax Act

2016Nu5606 Revocation of Disposition of Imposing capital gains tax

Plaintiff (Appellant)

NewA

Defendant (Appellant)

Head of Yeongdeungpo Tax Office

January 20, 2017

February 10, 2017

1. The plaintiff's appeal is dismissed.

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

the Gu Office's place of service and place of service

The judgment of the first instance shall be revoked. The imposition of capital gains tax of KRW 488,307,360 against the Plaintiff on February 2, 2015 by the Defendant shall be revoked.

1. Details of the disposition;

A. The Plaintiff acquired the instant land on April 1970, 1970 and transferred on January 31, 201, the same O-O miscellaneous land 5136 square meters and 990 square meters in the same O-O miscellaneous land (hereinafter referred to as “instant land”).

B. On March 25, 2011, the Plaintiff cut down the instant land for at least eight years with respect to the transfer of the instant land, and applied Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 11133, Dec. 31, 2011; hereinafter the same) to the Defendant, the Plaintiff paid KRW 94,483,930, capital gains tax when filing a preliminary return on the tax base of capital gains on the transfer income reverted to year 2011.

C. On February 2, 2015, the Defendant decided and notified the Plaintiff to additionally pay capital gains tax of 488,307,360 won (including general under-reported additional tax of 12,848,927 won, additional additional tax of 142,490,327 won) for the year 201 by deeming that the instant land falls under the land for non-business use for not less than eight years and it is difficult to view that it was directly cultivated by the Plaintiff, and that the instant land falls under the land for non-business use (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on April 29, 2015, but was dismissed on September 21, 2015.

[Reasons for Recognition] Unsatisfy, Gap 1, 6, 7, 10 evidence, Eul 1, 2 (including each number)

Each entry, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion (the argument regarding reduction or exemption of capital gains tax on self-owned farmland that came into existence in the trial is withdrawn)

The land in this case is classified as a land category as a miscellaneous land, a specific use area as an urban area (quasi-residential area) or an urban area (natural green belt area), but since it became impossible to construct as a development restriction zone around July 30, 1971, which was after the Plaintiff acquired, and it inevitably becomes a farming house, and thus, the land in this case is "the use prohibition under the law or other inevitable reasons prescribed by Presidential Decree after acquiring the land" under Article 104-3 (2) of the former Income Tax Act (amended by Act No. 10625, May 2, 2011; hereinafter the same shall apply) and therefore, the land in this case is not a land for non-business, and thus the special long-term possession deduction under Article 95 of the former Income Tax Act shall be applied.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) According to Articles 95 and 104 (1) 8 of the former Income Tax Act, where a long-term possession special deduction for non-business land is excluded, and in the case of rice paddy field, dry field, and orchard (hereinafter referred to as "farmland") under Article 104-3 (1) 1 (a), the owner does not reside in the farmland for the period prescribed by Presidential Decree, or farmland which is not cultivated by himself/herself is a non-business land. In addition, according to delegation, Article 168-6 of the former Enforcement Decree of Income Tax Act (amended by Presidential Decree No. 22950 of Jun. 3, 2011; hereinafter referred to as the "former Enforcement Decree of Income Tax Act") provides that when the ownership period of land is five years or more, the period exceeding two years in the five years immediately preceding the transfer date, and Article 104-3 (1) 1 (a) of the former Enforcement Decree of Income Tax Act provides that the period exceeding 20/100 of the ownership period of the land in the previous three years.

(2) The plaintiff argued that the land of this case is a miscellaneous land which can be constructed according to its land category, not farmland, but land of this case. Since it was used for farming company due to unavoidable reasons that could not be constructed due to the designation of a development-restricted zone, it should not be viewed as land for non-business use pursuant to Article 104-3 (2) of the former Income Tax Act. However, in determining whether special long-term holding deduction under the former Income Tax Act, the land actually used for farming without relation to the land category is considered as farmland. However, the plaintiff asserted that the land of this case was used for farming company consistently from the first instance to the first instance trial (the first instance court asserted that the land of this case was purchased with farming company income in the first instance court), and even if it is based on the statement of Gap evidence Nos. 3, 5, 7 (Ga number No.), the land of this case can be recognized as being mainly used for farming. Thus, the above assertion based on the premise that the land of this case is not the farmland of this case.

(3) In light of the progress of the instant lawsuit, we examine whether the Plaintiff’s assertion constitutes a special long-term holding deduction on the premise that the Plaintiff’s land constitutes a self-sufficient farmland for a period exceeding two years under Article 168-6 of the former Enforcement Decree of the Income Tax Act, i.e., the period exceeding two years in the five years immediately preceding the transfer date, 2 the period exceeding one year in the three years immediately preceding the transfer date, 3 the period exceeding one year in the three years immediately preceding the transfer date, and 20/100 of the land ownership period exceeding twenty percent

구 농지법(2011. 4. 12. 법률 제10580호로 개정되기 전의 것) 제2조 제5호는 '자경이란 농업인이 그 소유 농지에서 농작물 경작 또는 다년생식물 재배에 상시 종사하거나 농작업의 2분의 1 이상을 자기의 노동력으로 경작 또는 재배하는 것과 농업법인이 그 소유 농지에서 농작물을 경작하거나 다년생식물을 재배하는 것을 말한다'고 규정하고 있는데, 갑 제5, 7호증의 기재에 의하면 백광덕은 2002년부터 원고의 이 사건 토지 지상의 비닐하우스 6동과 농기구(경운기 1대)를 임대받아 경작한 사실을 인정할 수 있고, 원고의 종전 주장에 따르더라도 원고는 모종 옮겨심기, 수확 등 일손이필요한 시기에 일손이 모자라 지역 주민들에게 품삯을 주고 도움을 받았다는 것이므로 원고가 구 소득세법 시행령 제168조의6에 규정된 기간에 자경하였다고 볼 수 없다. 따라서 위 주장 역시 받아들일 수 없다.

3. Conclusion

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