Whether income generated from substitute land for farmland is subject to exemption from capital gains tax;

It is reasonable to see it as substitute land for farmland because it is confirmed that there is no resident in the location of land as of the date of the transfer of land, but has been limited to three years

1. The Defendant’s imposition disposition of capital gains tax of KRW 8,064,80 on August 10, 2006, and KRW 87,012,340 on January 5, 2007, shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The disposition of capital gains tax amounting to KRW 8,064,80 on August 10, 2006, the plaintiff specified the date of disposition as August 11, 2006, but it appears to be a clerical error, so it is so decided as above).

1. Details of the disposition;

A. On March 4, 1986, the Plaintiff acquired 2,231 square meters prior to 1248-10 square meters prior to 1248-16, prior to 1248-10, prior to 463 square meters prior to 1248-15, prior to 283 square meters in the same area, 283-7 square meters in the same area, and 283-7 square meters in the same area, and 283-8 square meters in the same area (hereinafter referred to as “the land within the above 4 lots”).

B. The Plaintiff, on December 8, 2005, transferred the instant land No. 1 to the Korea National Housing Corporation through a consultation procedure for acquiring the land. On February 2, 2006, the Plaintiff, along with an application for tax abatement and exemption pursuant to Article 89 subparagraph 4 of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same) and Article 153 (2) of the Enforcement Decree of the same Act, filed a preliminary return of capital gains tax on non-taxation for farmland substitute land, along with an application for tax abatement and exemption pursuant to Article 89 subparagraph 4 of the former Income Tax Act and Article 153 (2) of the Enforcement Decree of the same Act. On October 26, 2006, the Plaintiff acquired ○○ 269 m269 m

C. On August 10, 2006, the Defendant decided and notified the Plaintiff on August 10, 2006, that the Plaintiff did not reside at the seat of the instant land No. 1 as of the date of transfer of the instant land, and did not meet the non-taxation requirements under Article 89 subparag. 4 of the former Income Tax Act and Article 153(2) of the Enforcement Decree of the same Act, and determined capital gains tax of the instant land No. 1 as the standard market price under Article 114 of the Income Tax Act for the transfer income tax of KRW 8,064,80 for the year

D. Meanwhile, on July 18, 2006, the Plaintiff transferred the land No. 2 to the Korea National Housing Corporation on the ground of land expropriation as of July 12, 2006, and applied for reduction of capital gains tax due to non-taxation due to farmland substitute land pursuant to Article 70 of the Restriction of Special Taxation Act and Article 67 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19888, Feb. 28, 2007). On May 18, 2007, the Plaintiff acquired the land No. 1,640 square meters in 0,000, but the Defendant determined capital gains tax for the transfer of the land No. 2 for the same reason as of January 15, 2007, and notified the Defendant of KRW 87,012,340 (hereinafter referred to as “instant disposition”).

E. On November 1, 2006, the Plaintiff filed a request with the National Tax Tribunal for a trial on the instant Disposition Nos. 1, 2006, and on March 21, 2007, but the National Tax Tribunal dismissed each request for a trial on the instant Disposition Nos. 2 on December 4, 2006, as to the instant Disposition Nos. 1, and on June 14, 2007, the National Tax Tribunal dismissed each request for a trial on the instant Disposition Nos. 2. [Grounds for Recognition] without dispute, A, 1, 2, 3 (Partial), 7 (Partial), 8 (Additional Number, hereinafter the same shall apply), 9, and 1, and the purport of the entire pleadings.

2. Whether the instant disposition is lawful

A. The parties' assertion

(i)The plaintiff's assertion

The plaintiff acquired the land Nos. 1 and 2 of this case on March 4, 1986 and resided in ○○ City for about seven years from that time, and cultivated sublim trees for about seven years, and developed them into dry field around March 1994, and thereafter, the plaintiff spawn spawn spawn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn swn s

(2) The defendant's assertion

In order to constitute “income generated from the substitute land of a land for which no capital gains tax is levied, the transferor of the previous land shall also own the land. The transferor at the time of transfer refers to a person who has resided in the previous location for not less than 3 years under Article 153(2)1 of the former Enforcement Decree of the Income Tax Act and who has cultivated the land at the time of transfer, such as a person who resided in the location of the farmland at the time of transfer. Thus, since the plaintiff was not residing in the location of the above land as of the date of transfer of the first and second land, the transfer of the first and second land in this case shall not be exempt from taxation.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

In full view of the evidence mentioned above, evidence Nos. 4, 5, 6, 11 and evidence Nos. 4, 6, and 11 as well as witness’s testimony, the following facts can be acknowledged.

(1) From July 10, 1986, after acquiring the instant land Nos. 1 and 2, the Plaintiff resided in ○○○-dong 391-30, ○○○-dong 391-30, and cultivated sublime children. On August 10, 1983, the Plaintiff moved his resident registration to ○○-ri 346-1, ○○-ri 346-1, and is residing at ○○-si as of the date of transfer of the instant land Nos. 1 and 2.

(2) From March 1994 to the date of the transfer of the land Nos. 1 and 2 of this case, the Plaintiff resided in ○○ City on the farming machine from March 1994 to the date of the transfer of the land, and directly cultivated the farming machine from the land Nos. 1, 2 of this case to the ○○ Kim○, an infant in the farming machine, along with the farming ○○○.

(3)On the other hand, parts of Eul evidence 2, Eul evidence 3, Eul evidence 3, and Eul evidence 3, which seem to be contrary to the above facts, are as follows: as of June 17, 1998, the plaintiff, as of June 17, 1998, 3, 00 m2,231 m2,240 m2,463 m2,248-15 m2, and 1248-15 m2, and 463 m200 m2,000 m2,0000 m2,0000 m2,000 m2,000 m2,000 m2,000 m3,000 m2,000 m2,000 m2,000 m3,000 m2,000 m2,07 m2,000 m27.

D. Determination

(1) According to the provisions of the relevant laws and regulations applicable to this case, non-taxation of capital gains tax due to substitute farmland under the former Income Tax Act shall require that the previous land and new land have been cultivated for not less than 13 years while residing in the location of previous farmland. (2) The new land and new land have been acquired within 1 year after the transfer. (3) The area of the farmland to be newly acquired is not less than 1/2 of the area of the transferred farmland or its value is not less than 1/2 of the value of the transferred farmland, (5) the self-employed farmer will acquire due to the necessity for cultivation. (6)

Meanwhile, non-taxation of transfer income tax under the Restriction of Special Taxation Act requires that a person who has resided in the seat of farmland for not less than three years shall directly cultivate the farmland (or cultivate or cultivate the crops or perennial plants in his own farmland). ② The previous land shall be the land which is subject to taxation of agricultural income tax (including non-taxation, reduction and exemption, and small collection), and the newly acquired land shall be the farmland, ③ the newly acquired land shall be the farmland within one year after the transfer, ④ the newly acquired area of farmland shall be not less than 1/2 of the transferred farmland area, or the value thereof shall be not less than 1/3 of the transferred farmland value, ⑤ the self-employed farmer shall acquire the farmland in the seat of the farmland for not less than three years, ⑤ The self-employed farmer shall be able to cultivate the farmland in the seat of the farmland for three years after the acquisition of the new farmland, ② the meaning of direct cultivation under the Income Tax Act is clearly defined, ② the previous land shall be subject to taxation of agricultural income tax, ④ the newly acquired area of the farmland or other requirements related to the farmland.

(2) The purpose of not imposing capital gains tax is to protect farmers and promote the development and encouragement of agriculture by allowing and guaranteeing free substitute land for farmland, and thus, in this case, the previous land and the newly acquired land shall be farmland, and the transferor shall be a person driving the land at the time of transferring the previous land (see, e.g., Supreme Court Decision 95Nu3695, Sept. 29, 195). Meanwhile, the strict interpretation doctrine derived from the principle of no taxation without law applies not only to cases meeting taxation requirements, but also to cases meeting the requirements of non-taxation and tax reduction and exemption, which are applied to taxpayers as well as to cases meeting the requirements of no taxation without any justifiable reason. To interpret or interpret the requirements of tax exemption or tax exemption as favorable to taxpayers without any justifiable reason is not permitted (see, e.g., Supreme Court Decision 2005Da19163, May 25, 2006).

It is reasonable to view that the transferor, at the time of the transfer of the previous land, should reside in the location of the previous land at any time or for not less than three years, in addition to the transferor's own land, for three years or longer as stipulated in Article 153 (2) 1 of the former Enforcement Decree of the Income Tax Act, and Article 70 (1) of the Restriction of Special Taxation Act, and Article 67 (2) 1 of the Enforcement Decree of the same Act. It is reasonable to view that the transferor should be 's residing in the location of the previous land for three years or longer retroactively from the date of transfer' as an analogical interpretation.

From July 10, 1986 to July 9, 1993, the plaintiff cultivated for more than three years at ○○ City, which is the location of the land Nos. 1 and 2 of this case, for more than three years. The transfer date of the land of this case is also cultivated by itself. Thus, the transfer income tax on the land Nos. 1 and 2 of this case satisfies the requirement of "the plaintiff has cultivated while residing in the former location of the land for more than three years" among the non-taxation requirements. Therefore, the transfer income tax is imposed separately on the plaintiff's non-Cultivating for more than three years, on the ground that the plaintiff did not cultivate the newly acquired farmland in large land for more than three years, on the ground that he did not reside in the location of the land No. 1 and 2 of this case at the time of transfer of land No. 1 and 2 of this case.

1.2 Measures are illegal.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.

Related Acts and subordinate statutes

(1) The former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)

Article 89 (Non-Taxable Transfer Income Tax) No income tax shall be levied on any of the following incomes (hereinafter referred to as “transfer income tax”):

4. Income accruing from substituted land for farmland falling under such cases as prescribed by the Presidential Decree.

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005)

Article 153 (Non-taxation for Farmland)

(2) The term "cases prescribed by Presidential Decree" in subparagraph 4 of Article 89 of the Act means the cases of farmland substituted for cultivation (excluding the farmland falling under any subparagraph of paragraph (4)) meeting the requirements falling under any of the following subparagraphs:

1. Where a person, who resided in a location of previous farmland for not less than three years and has cultivated another farmland within one year from the date of transfer of previous farmland, while residing in a new location of farmland for not less than three years, or has cultivated the newly acquired farmland while residing in a new location of farmland for not less than three years, or residing in a new location of farmland for not less than three years;

2. Where the area of new farmland to be acquired is not less than the area of farmland to be transferred or the value thereof is not less than 1/2 of the value

(3) The term “location of farmland” in the proviso of paragraph (1) 3 and paragraph (2) 1 means the area falling under any of the following subparagraphs (including the relevant area which falls under the relevant area at the time of commencing cultivation, but comes not to fall under it due to a reorganization of administrative districts):

1. An area in a Si/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this paragraph) where farmland is located;

2.Areas within Sis/Guns/Gus adjacent to the areas referred to in subparagraph 1;

【Special Taxation Act

Article 70 (Abatement or Exemption of Transfer Income Tax for Substitute Land for Farmland)

(1) With respect to the income accruing from substituted land of farmland falling under such cases as prescribed by the Presidential Decree by the resident as prescribed by the Presidential Decree residing in the seat of such farmland, which is subject to taxation of agricultural income tax (including non-taxation, reduction and exemption, and small collection), the tax amount equivalent to 100/100 of the transfer income tax shall be abated or exempted.

(3) Any person who desires to have the tax abatement or exemption under paragraph (1) above shall apply for tax abatement or exemption as prescribed by the Presidential Decree.

(1) Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19888 of Feb. 28, 2007)

Article 67 (Requirements, etc. for Reduction or Exemption of Transfer Income Tax for Substitute Land for Farmland)

(1) The term "resident prescribed by the Presidential Decree" in Article 70 (1) of the Act means a person who has resided in any of the following areas (including the relevant area at the time of commencement of cultivation, but does not correspond thereto due to a reorganization, etc. of administrative districts) for at least three years:

1. An area in a Si/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this paragraph) where farmland is located;

2. An area within a Si/Gun/Gu adjacent to an area referred to in subparagraph 1.

(2) For the purpose of Article 70 (1) of the Act, the term “direct cultivation” means that a resident is engaged in cultivating the crops or growing perennial plants on his own farmland at all times, or cultivating or cultivating not less than half of the farming work with his own labor.

(3) The term "cases prescribed by the Presidential Decree" in Article 70 (1) of the Act means the substitute farmland for cultivation, which falls under any one of the following subparagraphs:

1. Where a person, who has resided in a location of previous farmland for not less than three years and acquired another farmland within one year from the date of transfer of previous farmland, has cultivated while residing in a location of new farmland for not less than three years, and falls under any of the following items:

(a) Newly acquired farmland shall be not less than one half of the area of transfer; and

(b) It shall be not less than a third of the value of newly acquired farmland to be transferred.