Since the land of this case cannot be deemed farmland as of the date of transfer, reduction or exemption cannot be applied, and the appraised value of the acquisition value shall not be recognized as the market price.

According to the aerial dust, it is difficult to view that the instant land was temporarily in a state of temporary absence, and it cannot be deemed as farmland as of the date of transfer, and thus, the capital gains tax reduction and exemption provisions cannot be applied. The Defendant’s disposition, which calculated the acquisition price of the instant land according to the

Article 69 of the Restriction of Special Taxation Act: Income tax reduction or exemption for self-farmland

Busan District Court 2018Guhap25111 Revocation of Disposition of Imposing capital gains tax

aa

b Head of the Tax Office

October 10, 2019

October 31, 2019

1. Of the instant lawsuits, the part demanding revocation of the disposition imposing capital gains tax as of September 1, 2017 shall be dismissed with respect to the portion exceeding KRW 0,000,000 among the instant lawsuits.

2. The plaintiff's remaining claims are dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of KRW 0,000,000 on September 1, 2017 against the Plaintiff was revoked.

1. Details of the disposition;

A. On April 14, 1992, the Plaintiff (the former name is ccccccc) acquired 2/15 shares of 2/15 shares in each of the e-Myeon 285 m2 m2 (hereinafter referred to as “1 land”), 286-1 m286 m2 (hereinafter referred to as “2 m37 m2”) and 3,377 m2 (hereinafter referred to as “the land in this case”) of 290 m290 m293,377 m2 (hereinafter referred to as “3m2”).

B. Each share of the instant land and the third land inherited by the Plaintiff was expropriated in Busan Metropolitan City DD-gun on April 3, 2015.

C. On May 15, 2015, the Plaintiff: (a) filed a preliminary return on transfer income tax for the year 2015, on the full amount of KRW 00,000,000 calculated by taking the transfer value to the Defendant as KRW 00,00,000; and (b) the special deduction for long-term holding as KRW 00,000; and (c) the tax amount calculated by taking the special deduction for long-term holding as KRW 00,000,00,000, under Article 69 of the former Restriction of Special Taxation Act (Amended by Act No. 13560, Dec. 15, 2015; hereinafter “former Restriction of Special Taxation Act”).

D. Gg, a co-owner of the instant land and third land, filed a claim for rectification to apply reduction or exemption for eight years, which was omitted at the time of filing the transfer income tax to the Defendant. As a result of on-site confirmation from August 23, 2016 to September 2, 2016, the Defendant confirmed that the instant land was farmland at the time of transfer; however, the instant land was not used as farmland after inheritance; confirmed that it was not farmland at the time of transfer; and confirmed that it was not farmland at the time of transfer; and confirmed that the Plaintiff omitted the report of KRW 00,000,000 according to the judgment of Busan District Court 205Guhap951) on the claim for the increase of compensation amount.

E. After the Defendant excluded the application of the capital gains tax reduction and exemption provisions on the instant land, the Defendant added KRW 00,000,000 to the transfer value of the Plaintiff’s share in the instant land and third land, calculated the acquisition value as the publicly assessed individual land price, and corrected and notified the Plaintiff on September 1, 2017, KRW 0,000,000 for capital gains tax for the year 2015.

F. The Plaintiff filed a request for examination with the National Tax Service on April 2, 2018 upon filing an objection, but the said request for examination was dismissed on December 7, 2018.

G. On October 2, 2019, the Defendant recognized the necessary expenses incurred by the Plaintiff in the lawsuit claiming the increased amount of compensation and rendered a disposition of reduction or correction to correct the transfer income tax for the year 2015 as KRW 0,000 (hereinafter “disposition of imposition of transfer income tax remaining after reduction or correction”) (hereinafter “Disposition of this case”).

[Ground of recognition] Facts without dispute, Gap 1, 3, 4, 5, 11, Eul 3 through 7 (including those with serial numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the part concerning the claim for revocation of ex officio cancelled tax amount among the lawsuit in this case is legitimate

When an administrative disposition is revoked, such disposition shall lose its validity and no longer exists, and a revocation lawsuit against a non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see, e.g., Supreme Court Decision 2012Du18202, Dec. 13, 2012).

The fact that the Defendant issued a decision to revoke ex officio the amount exceeding KRW 0,000,000 among capital gains tax imposed by the Defendant upon the Plaintiff according to the original disposition is as seen earlier. As such, among the instant lawsuit, the claim for revocation of ex officio revoked portion among the instant lawsuit is a claim for revocation of a disposition that does not exist due to the extinguishment of its validity, and thus, is unlawful as there is no legal interest in the lawsuit.

3. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition shall be revoked on the grounds that the following illegal grounds exist:

1) The Plaintiff’s hhh’s acquisition of the instant land on October 28, 1968 and died on April 14, 1992 while continuing farming. Since the Plaintiff cultivated the instant land for at least one year after inheritance and met the requirements for self-regulation for eight years, even if the Plaintiff temporarily closed down at around the time of transfer, the provisions on capital gains tax reduction and exemption under Article 69 of the former Restriction of Special Taxation Act shall apply.

2) Although the acquisition value of the instant land should be calculated on the basis of the market price, the Defendant calculated the acquisition value of the instant land under the officially assessed individual land price.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the first argument

A) According to Article 69(1) of the former Restriction of Special Taxation Act, an amount of tax equivalent to 100/100 of capital gains tax on income accrued from the transfer of land prescribed by Presidential Decree, among land cultivated by a resident prescribed by Presidential Decree residing in the seat of farmland for at least eight years by means prescribed by Presidential Decree, shall be reduced or exempted, and pursuant to Article 66(4) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26205, Apr. 20, 2015; hereinafter “former Enforcement Decree of the Restriction of Special Taxation Act”), “land prescribed by Presidential Decree” refers to farmland that he/she cultivated for at least eight years from the time of its acquisition to the

In addition, according to Article 66 (5) of the former Enforcement Decree of the Restriction of Special Taxation Act, farmland subject to paragraph (4) shall be based on farmland as of the date of transfer under Article 162 of the Enforcement Decree of the Income Tax Act, and pursuant to Article 162 (1) 7 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26302, Jun. 1, 2015), where farmland is expropriated for public projects under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects or other Acts, the payment shall be settled, the date of commencement of expropriation or the date of receipt

B) Under the principle of no taxation without law, a tax law interpretation shall be interpreted as a law interpretation, barring special circumstances, which prevents the requirements for tax exemption or tax exemption, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of equity in tax (see, e.g., Supreme Court Decision 2011Du20116, Dec. 13, 201).

Even if land on the public record is farmland, which is not actually cultivated as of the date of transfer shall not be deemed farmland as of the date of transfer, regardless of whether it is by the landowner’s own consent or by another person, and as long as it is not temporarily in a state of temporary closure (see, e.g., Supreme Court Decision 2006Du13183, Apr. 11, 2008). Therefore, the transferor of the transferred land must actively prove the existence of self-competitiveness of the transferred land (see, e.g., Supreme Court Decision 94Nu96, Oct. 21, 194).

C) In full view of the following circumstances, the aforementioned evidence, and evidence Nos. 1 and 2, and the purport of the entire arguments and arguments, the land of this case cannot be deemed farmland since it was not used as farmland until the date of transfer, and it is difficult to view that it was temporarily in a state of temporary closure at the time. Thus, the capital gains tax reduction and exemption provisions under Article 69 of the former Restriction of Special Taxation Act cannot be applied to the transfer of the land of this case.

① According to the aerial photography, the instant land is confirmed to have been used as a factory, air station, or a dried-out site from around 1992 to around 1996 (in particular, in light of the aerial photography dated May 26, 2010, April 3, 2013, and April 26, 2014, the network is installed to re-dried the instant land).

② At the time of the on-site inspection, the co-owner of the instant land and the third land (each of 7/15 shares) and the Ggg, the Plaintiff’s birth, was the co-owner of the instant land and the third land and the third land were inherited from the Defendant at the time of the on-site inspection, and confirmed the fact that the land was not farming houses on the instant land.

③ Although the Plaintiff alleged that he cultivated the agricultural products harvested from the instant land for not less than one year, the Plaintiff did not submit specific evidentiary data attesting that he cultivated the agricultural products, such as the details of shipping the agricultural products harvested from the instant land, the details of purchase of fertilizers, and the details of holding agricultural machinery

④ The on-site appraisal of the expropriation of the instant land conducted on May 15, 2013 by the Busan Metropolitan City Dd-gun is confirmed to have no agricultural loss compensation.

⑤ According to the integrated national tax computer network, there is no person subject to reduction or exemption of capital gains tax on the ground that the joint owners of the land of this case have reeded for at least eight years on the transfer of the land.

D) Therefore, the Plaintiff’s assertion on this cannot be accepted.

2) Determination on the second argument

A) According to Article 97(1)1(a) and (5) of the former Income Tax Act (Amended by Act No. 13557, Dec. 15, 2015); Article 163(9) of the former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 26302, Jun. 1, 2015); where inherited land is transferred, the transfer margin shall be calculated by considering the value appraised under Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing the inheritance as the actual transaction value at the time of acquisition.

According to the main sentence of Article 60(1) and (2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 13557, Dec. 15, 2015; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act"), inherited land

The value of the inheritance is based on the market price as of the date of commencing the inheritance, and 2. The term "market price" means the value generally deemed to be established when transactions are made freely between many and unspecified persons.

The latter part of Article 60(2) of the former Inheritance Tax and Gift Tax Act provides that "if there is an appraisal during the period of six months before or after the commencement date of the inheritance (the base date of appraisal, which is determined by Ordinance of the Ministry of Strategy and Finance, the average value of appraisal assessed by a reliable appraisal institution as determined by Ordinance of the Ministry of Strategy and Finance)" shall be recognized as the market price in principle.

Meanwhile, according to Articles 60(3) and 61(1)1 of the former Inheritance Tax and Gift Tax Act, where it is difficult to calculate the market price as of the date of commencing the inheritance, the officially assessed individual land price under the Public Notice of Values and Appraisal of Real Estate Act

B) In full view of the facts acknowledged earlier and the following circumstances revealed in the present pleading, it cannot be deemed that the Defendant calculated the acquisition price of the instant land according to the publicly assessed individual land price, and there exist unlawful causes, such as the Plaintiff’s assertion.

① Even based on the appraiser’s result of appraisal, the appraised value of the instant land at the base point of April 14, 1992 is only KRW 0,00,000 (hereinafter “instant appraised value”).

② The appraised value of the instant case is not the average appraised value assessed by two or more reliable appraisal institutions within 6 months before or after the commencing date of the inheritance, but is the appraised value calculated retroactively after 27 years or more from the commencing date of the inheritance. However, considering the passage of time and rapid change in the surrounding environment, the appraised value of the instant case cannot be deemed to have reflected the value generally recognized as being constituted when the appraisal value was freely traded among many and unspecified persons at the time of

③ At the time of the commencement of the inheritance, the land in this case was under the jurisdiction of jjGun in Gyeongnam-do at the time of the commencement of the inheritance, and was changed to the administrative district on March 1, 1995, the administrative district was changed to that of d-Gun in Busan Metropolitan City, but the data under the jurisdiction of j and d-Gun was not computerized, making it impossible to search for similar

④ In fact, appraiser 3 did not make an appraisal under Article 14 of the Act on the Public Announcement of Values and Appraisal of Real Estate, and applied the relevant laws and regulations or practices at the time (the method of seeking the acquisition cost by applying mutatis mutandis the provisions of the Income Tax Act, the method of seeking the acquisition cost by applying mutatis mutandis the provisions of the Act on the Public Announcement of Values and Appraisal of Real Estate, and the method of seeking a difference between the market price level compared to the officially announced value as of the end of the

C) Therefore, the Plaintiff’s assertion on this cannot be accepted.

4. Conclusion

Therefore, the part of the lawsuit in this case seeking revocation of the disposition imposing capital gains tax as of September 1, 2017 is unlawful for the portion exceeding KRW 0,000,000 among the lawsuit in this case. Thus, the plaintiff's remaining claims seeking revocation of the disposition in this case are dismissed as it is without merit. It is so decided as per Disposition.