Early High Court Decision 2015Du4156 ( November 11, 2015)

Whether the Plaintiff directly cultivated the instant land (whether to recognize reduction of and exemption from large land)

According to the evidence submitted by the Plaintiff and the party’s statement, the Plaintiff cannot be deemed to have directly cultivated the instant land, but there exists a justifiable reason to exempt the Plaintiff from penalty tax.

Article 70 of the former Restriction of Special Taxation Act

Suwon District Court 2016Gudan6478 ( October 11, 2017)

Maap*

00. Head of tax office

December 21, 2016

November 2017

1. The Defendant’s imposition of capital gains tax of KRW 119,853,70 for the Plaintiff on January 5, 2015 exceeds KRW 105,823,890, out of the imposition of capital gains tax of KRW 119,853,70 for the year 2013 shall be revoked.

3. The costs of the lawsuit shall be divided into six parts, and five of them shall be borne by the plaintiff, and the remainder by the defendant respectively.

The imposition of capital gains tax of 119,853,700 won on January 5, 2015 by the defendant of the Gu office against the plaintiff on January 5, 2015 shall be revoked.

1. Details of the disposition;

A. On June 19, 2008, the Plaintiff acquired and owned a total of 3,200 square meters, 00 00 - 00 - 00 - 000 - 685-2 - 982 m2, 686-1 - 2,102 m2, and 686-3 116 m2, such as 686-3 m2, and transferred part of land to Nonparty Y and Kim0 m2 on September 13, 2013.

B. A part of the land transferred by the Plaintiff to Y, etc. is 00:0 00 -00 00 - 000 - 686-4 1,995 m2, and 686-5 - 593 m2 (hereinafter referred to as “instant land”). This is part of the land before subdivision, which is 00:0 00 -00 - 686-1 - 686-2 - which is the same as that under the following table. The Plaintiff filed a report on capital gains tax on the instant land as of November 30, 2013, but the Defendant rejected the Plaintiff’s on-site confirmation from October 16, 2014 to October 24, 2014 on the ground that the instant land cannot be deemed as farmland at the time of transfer, and the Plaintiff was subject to a disposition of reduction or exemption of additional tax on the farmland, including the Plaintiff’s objection to the Plaintiff on May 13, 2015 (hereinafter referred to 2015).

[Ground of recognition] No dispute, Gap 1, 2, 56 through 58, Eul 1, 2, 5 and 9, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The land of this case is clear that the Plaintiff was farmland cultivated as dry field at the time of entering into a sales contract with Non-Party 0 and Kim0 accommodation. However, since the buyer purchased the land for the purpose of using it as a building site exhibition, the buyer removed the crops planted immediately before the transfer registration and the buyer commenced construction work on the building after the transfer registration, and thus, the Plaintiff was not farmland at the time of the Defendant’s on-site confirmation. Since the purchase of the land before the division, the Plaintiff purchased the land from the above land to the time of the sale of the land, and the Defendant’s disposition of this case should be revoked as unlawful.

However, the Plaintiff’s imposition of penalty tax is unlawful on the ground that there is a justifiable ground that the Plaintiff would not pay penalty tax to the Plaintiff due to the fact that the Plaintiff had already been subjected to reduction and exemption of substitute farmland from the Defendant with respect to the land divided from the same land as the instant land, such as the instant land.

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) Whether the plaintiff's self-defense is legitimate (whether the part concerning the principal tax is legitimate)

A) Relevant legal principles

Article 70(1) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter the same) provides that the amount of tax equivalent to 100/100 of capital gains tax shall be reduced or exempted on the income accruing from substitute land as farmland falling under cases prescribed by Presidential Decree due to the necessity for farming as land cultivated by a resident prescribed by Presidential Decree residing in the seat of farmland. Article 67(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26070, Feb. 3, 2015; hereinafter the same shall apply) provides that "direct farming" referred to in Article 70 of the Act means that a resident engages in cultivating crops or perennial plants in his/her own farmland, or engages in cultivating or cultivating 1/2 or more of farming plants with his/her own labor, and Article 67(3)1 of the Enforcement Decree of the same Act provides that a person who cultivates farmland continues to reside in a new farmland for at least three years after the previous farmland transfer.

The meaning of “one-half or more of its own labor force” in this context should be interpreted on the basis of literature (see, e.g., Supreme Court Decision 2012Du19700, Dec. 27, 2012). In such a case, insofar as a person directly engaged in farming concurrently engages in other occupation, even if he/she concurrently engages in another occupation, it cannot be deemed as falling under one-half or more if he/she indirectly engages in another occupation (see, e.g., Supreme Court Decision 2002Du844, Oct. 11, 2002). Furthermore, the burden of proving the direct cultivation of land subject to reduction or exemption of capital gains tax lies in a taxpayer claiming the reduction or exemption of capital gains tax (see, e.g., Supreme Court Decision 90Nu6293, Apr. 23, 191). The purport of the provision of non-taxation of capital gains tax on the farmland substitute is to protect and promote agriculture of farmers through free substitution and guarantee of farmland, or to the effect of tax exemption requirements.

B) In the instant case:

The Plaintiff reported on September 13, 2013 as the date of the transfer of the instant land. Around August 30, 2013, a public official in charge of the 00-Gu office has indicated that “the site is cultivating vegetables (e.g., e., e., e., maths and maths) as of the date of the on-site investigation according to the business trip mold (A59-2) prepared by the Plaintiff around August 30, 2013, to investigate the actual status of the use of farmland following the application for self-certification of 00-Gu 00-dong 686-4, among the instant land.” Accordingly, the fact that a field photograph of farmland where crops are planted is attached to the Plaintiff’s land that is actually used for cultivation, namely, farmland. However, even if the instant land falls under farmland at the time of the transfer date, there is no possibility that the Plaintiff had entered the land in question for more than 3 years, including the Plaintiff’s own health for about 3 years or more than 5 years, 200-1 through 20-1.

○ During the retention period of the instant land, the Plaintiff was registered as the representative director of the 00 industry development (established on July 3, 1989), a company conducting wholesale and retail business at 00 00 cc. (the opening of May 25, 1995) and 00 cc. (the opening of December 20, 1996) operating freezing fishery products wholesale and retail business. The Plaintiff was also registered as the representative director of the 00 cc. (the opening of July 3, 1989) operating 0 cc. and 00 cc. (the opening of August 19, 2013) operating the said land over the retention period, and from 1.7 billion won to 1.7 billion won, it seems that it was difficult for the Plaintiff to directly operate the said land in light of the above type of business and its size.

○ At the time of the acquisition of the instant land at the time of the newspaper, the Plaintiff testified that he was the rice shed before performing the farmland banking work on June 2012, 2012, but instead, he was found to have been in full charge of the farming day and left the agricultural house exclusively to the person who is the person who is the former dong Kim C, and that he was in charge of Kim C in his possession by taking advantage of the compact spact, and by taking advantage of the compact spact. Furthermore, the Plaintiff himself did not own the farming machine, and the farming machine, such as Ho, spin, spin, and spination, was kept in a warehouse with 00ss, and the rice shed was stored in a warehouse with 00s, and the form and method of cultivation apart from the case of a general self-employed farmer.

Meanwhile, at the time of the Plaintiff’s questioning, the Plaintiff: (a) around June 2013, after completing a construction work for reinforcement on May 2013, 2013; (b) sold the instant land to Y, YY, Kim0, who was a seller of building materials, and removed crops at the Plaintiff’s request on or around July 4, 2013; and (c) performed a construction work for converting the instant land into a dry field by investing a large amount of construction cost as in the roadside; and (d) on or around May 5, 2013, the Plaintiff opened the instant land at the location of the real estate immediately after the purchase and sale of the said land; and (e) sold the said land to YY, who was a seller of building materials, and removed agricultural crops at the Plaintiff’s request. Furthermore, according to the Plaintiff’s statement at the time of his own questioning, the Plaintiff was raising the instant land into a dry field to temporarily change the form and quality of the instant land for the purpose of developing the dry field and the instant land.

The farmland ledger (A) submitted by the Plaintiff is located in the name of 0 nights, and the aggregate of the three lots of farmland is about 4,156 m2,00,000,0000 00 m2,000,000 m2, and it is insufficient to support the Plaintiff’s direct cultivation of all of the above farmland, in light of the fact that the land category of 0 m2 and 00 m3 m3,000 m3,000 m2, and that the land for 10 m2,000 m3,000 m2,000 m3,000 m2,000 m2,000 m3,000 m2,000 m3,000 m3,000 m2,000 m3,000 m3,000 m2,00.

As seen earlier, the purport of the provision that imposes capital gains tax on the substitute land of farmland is to protect farmers through free permission and guarantee of substitution of farmland, or to develop and encourage agriculture. Therefore, the acquisition and sale of farmland by self-employed farmers should be limited to cases where the farmland possessed by the self-employed farmer is to be sold for the purpose of cultivation due to the necessity for cultivation. However, according to the Plaintiff’s assertion, around April 4, 2013, the Plaintiff sold 686-1 496 m2 to 0 m2 in order to use the land prior to subdivision as business funds. The instant land was sold by the purchaser as the building materials exhibition place to use it. To this end, the transferor did not sell or transfer the farmland to 00 m2 in order to substitute for the land owned by the self-employed farmer, and thus, it is reasonable to deem the Defendant to be exempt from taxation on the said land for a relatively short period of time for raising business funds or transfer margin (see, e.g., Supreme Court Decision 2005Da396969, Sept. 16, 196, etc.).

2) Whether the additional tax portion is lawful

A) Relevant legal principles

Under the tax law, if a taxpayer violates his/her obligations, such as a tax return and tax payment, 30 m20 m20 m2.0 m20 m20 m28 m20 m20 m28 m20 m28 m20 m28 and 40 m20 m28 m20 m28 m20 m28,000 m28 m2620 m28 m28,000 m20 m20 m28,000 m20 m28,000 m20 m28,000 m20 m286 m28,000 m20 m268,000 m20 m268,000 m20 m28,000 m26,06.

3) Sub-decisions

Therefore, the Plaintiff’s claim of this case is justifiable to the extent that the Plaintiff seeks revocation of the capital gains tax of this case, since the portion of KRW 14,029,805 (=1,30,938 +12,698,867) in the disposition of imposition of KRW 119,853,70 among the disposition of imposition of KRW 119,853,700 is unlawful. Accordingly, when calculating the capital gains tax to be paid by the Plaintiff in relation to the transfer of the land of this case, the portion exceeding the above KRW 105,823,890 (119,853,700-14,700-14,029,805) among the disposition of this case exceeds the above KRW 105,823,890 among the disposition of this case is unlawful.

The plaintiff's claim is partially accepted, and it is so decided as per Disposition.