Appellate 2013 Schedule 1182 ( May 9, 2013)

The reduction or exemption of substitute farmland which is not directly cultivated is justified.

At the time of acquisition and holding of transferred farmland, the Plaintiff was the student status and soldier status, and it cannot be deemed that the Plaintiff cultivated with one-half or more self-help under Article 67 (2) of the Restriction of Special Taxation Act, i.e., the student status at the time of acquisition and holding of substitute farmland.

Article 70(1) of the Restriction of Special Taxation Act

2013Guhap1397 Revocation of Disposition of Imposing capital gains tax

The United States of America

○ Head of tax office

October 10, 2013

October 24, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax OOOO on January 7, 2013 is revoked.

1. Details of the disposition;

A. On April 21, 2004, the Plaintiff acquired 2/7 shares in the OO-gun O-O-O-O-O-O-O-O-O, 462-1, 487-2, 503-3, 71-4, 71-7, and 72-5 (hereinafter “instant farmland”). The instant farmland was expropriated as a public site in the Ministry of Land, Transport and Maritime Affairs and Ulsan Metropolitan City between February 18, 2009 and December 1, 2009.

B. On June 26, 2009, the Plaintiff acquired, together with the Plaintiff’s mother and the criminal punishment, an O-gun O-gun O-gun O-gun 158-8 square meters, 157.7 square meters in O-ri, 157.7 square meters in O-ri and 379.25 square meters in O-ri, O-ri 125-11, 379.25 square meters in 201 (hereinafter “the Plaintiff’s mother and O-gun”).

C. The Plaintiff filed an application for reduction or exemption of capital gains tax due to farmland substitute land with respect to the instant farmland at the time of filing a report on capital gains tax in 2009 and 2010. However, the Defendant imposed an imposition of capital gains tax on the Plaintiff on January 7, 2013 on the ground that the Plaintiff did not directly cultivate the farmland as his student status at the time of the substitute land of the instant farmland due to the reason that the Plaintiff did not meet the requirements for reduction or exemption of capital gains tax on substitute land.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 5, 6, Eul evidence Nos. 1 and 2 (including additional number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

After acquiring the farmland of this case on April 21, 2004, the Plaintiff’s mother, her punishment, and her mother living together at the same domicile, and the Plaintiff’s mother living together with the farmland of this case and her mother living together with the farmland of this case, and her mother was Do and her mother. As the Plaintiff is deemed to have cultivated the farmland of this case, the Plaintiff shall be deemed to have directly cultivated the farmland of this case, so capital gains tax on farmland of this case must be reduced or exempted. Even if the Plaintiff does not own own farmland of this case, the Plaintiff’s acquisition of the farmland of this case inherited from her father for her livelihood, acquisition of substitute farmland for her livelihood, acquisition of capital gains from transfer, and transactions of farmland of this case are not deemed to have been done with speculative public necessity, while the Plaintiff cannot be deemed to have suffered enormous financial disadvantage due to the disposition of this case, the disposition of this case is unlawful as it deviates from and abused discretion

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Determination

1) Article 70(1) of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 921 of Jan. 1, 2010) and Article 67(1), (2), and (3)1 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22037 of Feb. 18, 2010) provide that “Where a person who resided in the former location of farmland for not less than three years and cultivated farmland while residing in the new location of farmland for not less than three years (two years where expropriated) within one year from the date of transfer of the previous farmland, “where the area of new farmland acquired is 1/2 of the area of farmland to be acquired or more than a third of the value of the transferred farmland, or 1/100 of the value of the farmland to be transferred, the amount of tax equivalent to 100/100 of capital gains tax shall be reduced or exempted.” This means that “The transferor of the previous land shall be a person liable to pay capital gains tax reduction or exemption, 95.”

2) In the instant case, comprehensively taking account of the overall purport of the statements and arguments in the evidence Nos. 3 and 4, the Plaintiff is recognized as having been serving on active duty as a result of entering the racing University on or around March 2005, from January 18, 2007 to December 29, 2008. Thus, even if the Plaintiff was unable to directly cultivate farmland at the seat of the Plaintiff during his military service, it is obvious in light of the empirical rule that the Plaintiff could not directly cultivate farmland at the seat of the instant farmland, and even if the Plaintiff was going to go to work as a mother’s farmer while entering a high school or university students, the term “direct cultivating” under Article 67(2) of the former Enforcement Decree of the Restriction of Special Taxation Act is limited to “a resident is ordinarily engaged in cultivating crops or growing perennial plants on his own land, or cultivating or cultivating not less than a half of the farming work with his own labor,” and in light of the purport of the reduction or exemption of capital gains tax on farmland.

3) Furthermore, even if the Plaintiff’s disposal of the farmland of this case is not limited to the acquisition of substitute farmland due to the expropriation of the farmland of this case, the instant disposition is not a discretionary act. The capital gains tax exemption system for substitute farmland should be operated in accordance with the purport of protecting farmers and promoting agriculture. The capital gains tax imposed on the Plaintiff is imposed on gains accruing from the actual transfer of the farmland of this case on the premise of income gained by the Plaintiff, and it is difficult to deem the instant disposition as a huge property damage to the Plaintiff, and there is a more public interest than the fairness of tax administration. In full view of the above, the Plaintiff’s assertion that the instant disposition is unlawful is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed. It is so decided as per Disposition.