Early High Court Decision 201Du4825 ( December 19, 2011)

No one-half or more of the farming works shall be deemed to have been carried on with his own labor;

It is reasonable to view that most of the labor force necessary for farming work is provided by the spouse in light of the physical ability at the time or the content of the work for farming, such as the fact that there was a delay in physical disability caused by a sudden disease, and the spouse was supported by cultivating crops, etc., and it is reasonable that the Plaintiff cannot be deemed to have performed at least half of the farming work

Article 70 of the Restriction of Special Taxation Act

Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act

2011Revocation of disposition of imposing capital gains tax, etc.

Maximum XX

The Director of Incheon Tax Office

April 12, 2012

April 26, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 000 of the transfer income tax for the year 2009 against the Plaintiff on August 1, 2011 is revoked (the date of the disposition stated in the complaint’s claim and the “tax amount of KRW 000” is clear that it is a clerical error).

1. Details of the disposition;

A. On April 1, 2005, the Plaintiff acquired and possessed 000 m27 m2 per annum, such as 000 m200 m2, such as 000 m2, m204 m2, and on April 4, 2006, 9 m200 m2, m200 m2. On November 30, 2009, the Plaintiff transferred the land of the said three m2 (hereinafter “instant farmland”) to KimA on KRW 00 m21 m21 m2, and on December 29, 2009, acquired the land of the said three m21 m20 m2.

B. When filing a preliminary return on the tax base of capital gains tax following the transfer of the instant farmland, the Plaintiff applied for reduction or exemption of capital gains tax on the ground that the instant farmland constitutes reduction or exemption of capital gains tax due to farmland substitute land under Article 70(1) of the former Restriction of Special Taxation Act (amended by Act No. 921, Jan. 1, 2010; hereinafter “Special Taxation Act”).

C. The Defendant, on August 1, 2011, excluded the application of Article 70(1) of the Restriction of Special Taxation Act on the ground that the Plaintiff did not directly cultivate the instant farmland, issued a correction and notice of KRW 000 (including additional tax) for the transfer income tax reverted to the Plaintiff in 2009 (hereinafter “instant disposition”).

D. On October 25, 201, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on October 25, 201, but was dismissed on December 19, 201.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 and 4, the purport of the whole pleadings

2. Determination

A. The plaintiff's assertion

With regard to the meaning of "direct cultivation" under Article 70 (1) of the Restriction of Special Taxation Act, Article 67 (2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21882 of Dec. 14, 2009, hereinafter "Enforcement Decree of the Restriction of Special Taxation Act") provides that "the residents are engaged in cultivating or cultivating crops or perennial plants on their own farmland at all times or by cultivating or cultivating not less than 1/2 of the farming work with their own labor." Considering the legislative purpose of the regulations on reduction and exemption of capital gains tax for their own farmland, "direct cultivation" includes the cultivation of farmland with the help of their family members living or living together with the same household. Since the plaintiff's husband's husband's farmland was cultivated directly by the plaintiff's husband of this case, the disposition of this case is unlawful even though the income of the plaintiff's farmland from the transfer of farmland in this case is the premise that the transfer of farmland in this case is subject to reduction and exemption of capital gains tax.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Relevant legal principles

According to Article 70(1) of the Restriction of Special Taxation Act and Article 67(1), (2), and (3)1 of the Enforcement Decree of the Restriction of Special Taxation Act, where a person who directly cultivated while residing in the previous location of farmland for not less than three years has acquired another farmland within one year (two years in cases of expropriation by consultation, expropriation under the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor and by consultation, or by expropriation under other Acts) from the date of the transfer of the previous farmland, and has cultivated while residing in the new location of farmland for not less than three years, and the area of new acquired farmland is not less than half of the area of farmland to be transferred or a third of the value of transferred farmland is not less than a third of the value of the farmland to be transferred", the tax amount equivalent to 10/100

The purpose of the regulation on reduction of capital gains tax for substitute land of farmland under the Restriction of Special Taxation Act is to protect self-employed farmers and encourage agriculture by guaranteeing free substitution of farmland. Therefore, the object of reduction or exemption should be limited to the cases where the farmland cultivated by the self-employed farmer acquired and cultivated is to substitute land for cultivation.

Therefore, the requirements for reduction or exemption of capital gains tax due to substitute land for farmland shall be farmland, ① the previous land and newly acquired land shall be farmland, ② direct cultivation shall be conducted while residing in the previous farmland location for not less than three years, and in addition, residing in the new farmland location for not less than three years. ③ The residence and cultivation shall begin within one year (two years in the case of expropriation, etc.) from the date of transfer of the previous land. ④ The period between the transfer date of previous land and the acquisition date of new land shall be within one year (two years in the case of expropriation, etc.). ⑤ The area of newly acquired farmland shall be not less than 1/2 of the area of farmland transferred or the value thereof shall be not less than 1/3

In addition, the term "direct cultivation" means that a resident engages in the cultivation of crops or the growing of perennial plants in his own farmland at all times (in the location and location of the farmer and farmland, in the vicinity of time) or cultivates or cultivates not less than a half of farming work with his own labor (in the direct labor force of the farmer).

In addition, in order for the Plaintiff to have the capital gains tax reduced or exempted on the income accrued from substitute land for farmland for cultivation, the Plaintiff must first prove the above facts of the assertion ② (see, e.g., Supreme Court Decision 92Nu11893, Jul. 13, 1993).

(2) Whether the provision of this case can include cases where a person receives assistance from his family members living or living in the same household.

Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, regardless of whether they are taxable or non-taxable requirements or tax reduction or exemption requirements, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret the provisions that can be clearly viewed as preferential provisions among the requirements for reduction or exemption (see, e.g., Supreme Court Decision 2011Du20116, Dec. 13, 2011)

The instant provision is a provision introduced by the amendment of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19256, Dec. 31, 2005; Presidential Decree No. 19256), and it clearly stipulates that "the meaning of direct cultivation under Article 70 (1) of the Act refers to the case where a resident is engaged in the cultivation of crops or the growing of perennial plants on his/her own land at all times or in the cultivation or cultivation of perennial plants with his/her own labor." Thus, the court shall interpret the meaning of "one-half or more of his/her own labor" and determine whether he/she directly cultivates farmland (see Supreme Court Decision 2010Du8423, Sept. 30, 2010).

On the other hand, Supreme Court Decision 89Nu7412 delivered on May 11, 1990, etc. cited by the plaintiff as the basis of the argument, is a precedent concerning the previous provisions before the establishment of the provision of this case, which limited the meaning of "direct cultivation", and cannot be applied as it is to the interpretation of the provision of this case.

(3) Whether the Plaintiff was “direct farming” of the farmland of this case

Even according to the plaintiff's assertion, the plaintiff suffered from a sudden disorder, such as a scarcity scarcity, etc. from around September 2007, and the spouse B supported the plaintiff's physical ability at the time and the contents of farming work. In light of the plaintiff's physical ability at the time, most of the labor force necessary for farming work at the time was provided by the plaintiff's spouse B, and the plaintiff was merely neglected to the assistant (at least 1/2 of farming work until the plaintiff suffered from the above scarcity disease, the period shall not be deemed to have been about 2 years and 5 months (it is nothing more than April 2005 - September 2007). The plaintiff cannot be deemed to have performed the farming work by 1/2 or more of the farming work necessary for the farming of the farmland at issue.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.