Examination-transfer-2016-0129 ( March 31, 2017)

Whether it constitutes land for business use

In full view of the fact that various trees were planted in the instant land, and seedlings were newly planted and trees were sold to landscaping companies, etc., the instant land constitutes farmland as land used for cultivating landscape trees, etc., rather than land for planting landscape trees, and the Plaintiff did not have resided in the location of the instant land, and thus constitutes land for non-business use.

Article 168-11 of the Enforcement Decree

Incheon District Court 2017Guhap52638 Revocation of Disposition Rejecting Transfer Income Tax Correction

KimOO-1

OO Head of the tax office

8.06.21

2018.12

1. The plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant’s refusal of filing a claim for rectification of capital gains tax against Plaintiff Kim-o on July 6, 2016, and the Defendant

On July 8, 2016, the rejection of an application for capital gains tax correction filed against Plaintiff Kim-O shall be revoked.

1. Details of the disposition;

A. On January 10, 2005, the Plaintiffs purchased each share of 1/2 in the auction procedure, among the two parcels, not less than 435m2 and 27m2 (hereinafter referred to as the “shared land”) in the OO, O, O, O, O, O, O, O, O, O, O, O, O, and the Plaintiff Kim O, on March 4, 2005, purchased one parcel, other than 645-1m2 and 3,302m2 (hereinafter referred to as the “Plaintiff Kim O,”) from the auction procedure.

On January 20, 2005, the Plaintiffs purchased trees, etc. on the instant land from Associate O Construction on December 21, 2010, from AssociateO Construction Co., Ltd. (hereinafter referred to as the “QuasiO Construction”) by designating the lease deposit amount of KRW 70 million and the lease term of KRW 60,000 for the purpose of spreading the land for landscaping construction business. As quasiO Construction closed on December 20, 2010, the Plaintiffs purchased trees, etc. on the instant land from Associate Construction Co., Ltd. (hereinafter referred to as “the instant land”).

B. On March 29, 2013, the Plaintiffs transferred the instant land to the Co., Ltd. (2,608,330,000 won for the co-owned land, and KRW 169,20,000 for the land price for Plaintiff Kim O-M land), and on May 31, 2013, the Plaintiffs reported and paid the transfer income tax reverted to the year 2013 for which the special deduction for long-term possession was not applied to the transfer of the instant land as the land for non-business use (Plaintiff Kim-Mop 322,15,140 won for the land for non-business use).

C. On April 16, 2016, the Plaintiffs filed a claim for correction to request a refund of part of the capital gains tax already paid by applying the special deduction for long-term holding, on the transfer of the instant land, on the ground that the instant land was used as land for landscaping crop growing business during the period owned by the Plaintiffs, and thus constitutes land for business not for non-business use under Article 104-3(1) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; hereinafter the same).

D. Even if the instant land was used as land for landscaping crop planting business as alleged by the Plaintiffs, the Defendant rejected the Plaintiff’s claim for correction on July 6, 2016 on the ground that the amount of income from landscaping crop planting business on the land value is based on the period during which the Plaintiffs owned the instant land, and the instant land constitutes non-business land (hereinafter “each disposition of this case”). On July 8, 2016, the Defendant issued a disposition rejecting the Plaintiff’s claim for correction of the Plaintiff’s KimO’s right to request for correction (hereinafter “each disposition of this case”).

[Ground of recognition] Evidence Nos. 1, 2, 3-1, 4, 5, 1 and 2, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

Since the land of this case is used for the purpose of keeping trees for landscaping in the period owned by the plaintiffs for sale, it constitutes "farmland, forest land, and land for planting landscape crops business or land for flowers sales facility business among land other than stock farms" under Article 104-3 (1) 4 of the former Income Tax Act, and since the annual income ratio of the value of land was 7/100 or more, it does not constitute non-business land under Article 104-3 (1) of the former Income Tax Act, and thus, each disposition of this case which rejected the plaintiffs' request for correction is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Current status of the instant land

Articles 95(1) and (2), 104-3(1) of the former Income Tax Act, Articles 168-8(1) and (2), 168-1(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 25193, Feb. 21, 2014; hereinafter the same shall apply), and Article 83-4(15) of the Enforcement Rule of the Income Tax Act shall be calculated by subtracting the special deduction amount for long-term holding from the gains on transfer in cases of transfer of land, the amount of capital gains shall be calculated by deducting the special deduction amount for long-term holding from the gains on transfer in cases of transfer of land, but in cases of land for non-business use, the special deduction amount for long-term holding shall not be applied

Article 104-3 (1) of the former Income Tax Act and Article 168-7 of the former Enforcement Decree of the Income Tax Act provide that the determination of farmland, forest land, stock farm land, and other land shall, in principle, be based on the actual status, and where the actual status is unclear, it shall be based on the current status recorded on the public register. Article 168-8 (1) of the former Enforcement Decree of the Income Tax Act provides that farmland refers to land actually used for cultivation regardless of its land category, as a paddy, field, and orchard with respect to farmland, and Article 2 subparagraph 1 (a) of the Farmland Act and Article 2 (1) 3 of the former Enforcement Decree of the Farmland Act (Amended by Presidential Decree No. 26302, Jun. 1, 2015) provide that land used for the cultivation of trees for landscaping, etc. shall be deemed farmland regardless of its land category. Thus, land used for the cultivation of trees for landscaping, etc. shall be deemed farmland, woodland, forest, and other farmland.

In light of the following circumstances in which evidence evidence Nos. 7 through 15 showed the overall purport of the pleadings, it is reasonable to view that the land in this case constitutes farmland under Article 104-3 (1) 1 of the former Income Tax Act, which is used as farmland for growing trees such as landscaping trees, and is used as farmland for planting plants under the Korean Industrial Standards Classification Table publicly notified by the Commissioner of the National Statistical Office, and is classified as industrial activities providing services for planting plants in accordance with contracts, etc., and fireproof sales facilities are classified as farmland under Article 104-3 (1) 4 of the former Enforcement Decree of the Income Tax Act or land for landscaping sales facilities of this case, not land for landscaping sales facilities of this case, which the plaintiff asserts that services for planting plants, such as building flowers trees, etc. under the Income Tax Act, were newly planted and sold to landscaping companies, etc., and accordingly extracted and removed from the land in this case.

2) Whether the instant land is non-business land

The main sentence of Article 104-3 (1) 1 (a) of the former Income Tax Act provides that in the case of farmland, "farmland which is not located in the location of farmland or is not cultivated by the owner for a certain period of time during the period for which the owner owns the land," and Article 168-8 (2) of the former Enforcement Decree of the Income Tax Act provides that "farmland which the owner does not reside in the location of farmland or does not cultivate by himself/herself" means farmland excluding farmland, the farmland, the resident registration of which is made in the area within 20 kilometers in straight line from the farmland, the adjacent Si/Gun/Gu, or the adjacent Si/Gun/Gu, or the farmland, or the person who actually resides,

The land of this case is located in the OO of the Cheongbuk-gun, and the plaintiffs' resident registration address is identical or adjacent to the land of this case during the period in which the plaintiffs owned the land of this case was located in the OOdong or OO, Incheon, which is not an area located within 20 kilometers in straight line from the land of this case, and the plaintiffs seems to have resided in the above resident registration address (written evidence No. 1). Thus, the land of this case constitutes non-business land under Articles 95 (2) and 104-3 (1) 1 (a) of the former Income Tax Act as farmland for which the plaintiffs, who are owners, do not reside in the land of this case.

3) Whether each of the dispositions of this case is legitimate

Since the special deduction for long-term possession cannot be applied to the transfer of the land of this case as long as the land falls under the non-business land, each of the dispositions of this case in this regard is legitimate.

3. Conclusion

The plaintiffs' claims are dismissed as it is without merit. It is so decided as per Disposition.