Suwon District Court 201Gudan1250 ( November 28, 2011)

early 2010 Heavy3525 ( October 10, 201)

It is recognized that the family members living together with the family members who have been self-employed for not less than eight years.

Since it seems that the state of assistance in the farming work of the parents living with the parents from the time of land acquisition or the farming work was conducted with the parents, it appears that the farming work could have been conducted after school, weekend, public holiday, or vacation, it is recognized that the land was cultivated directly for at least eight years, or together with the family members living or living together with the family members in the same household,

Article 69 of the Restriction of Special Taxation Act

2011Nu46189. Revocation of imposition of capital gains tax

Park XX

Head of Namyang District Tax Office

Suwon District Court Decision 2011Gudan1250 Decided November 28, 2011

July 17, 2012

August 17, 2012

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The Defendant’s disposition of imposition of capital gains tax of KRW 000 for the year 2004 against the Plaintiff on August 5, 2010 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Transfer income tax;

The following facts are either not disputed between the parties, or acknowledged by taking account of the overall purport of the arguments in Gap evidence Nos. 1, 2, and Eul evidence Nos. 1 and 2 (including paper numbers):

O On March 16, 1957, the Plaintiff acquired XX 000 m2,000 m2 (hereinafter referred to as the “instant land”) and kept after completing the registration of ownership transfer on September 26 of the same year, and transferred it to compulsory auction on April 10, 2004, but did not report and pay the transfer income tax.

O On May 2010, the Defendant notified the Plaintiff of the pre-assessment of capital gains tax for the year 2004, and the Plaintiff filed a request for the review of the legality before taxation on May 28, 2010, but was non-adopted on June 28, 2010.

O On October 1, 2010, the Defendant decided and notified the Plaintiff of KRW 000 of the transfer income tax belonging to the year 2004 (hereinafter referred to as the “instant disposition”).

O The Plaintiff was dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal, but was dismissed on February 10, 201.

2. The plaintiff's assertion

The Plaintiff was a high school student at the time of the acquisition of the instant land, but thereafter, resided at the location of the instant land for not less than eight years and did not have a farming house in the instant land by a member’s cooperation with the Plaintiff, including the Plaintiff, and thus, the instant disposition that excluded the Plaintiff from capital gains tax reduction or exemption pursuant to Article 69(1) of the Restriction of Special Taxation Act is unlawful.

3. Whether the requirements for reduction or exemption are satisfied;

A. Relevant statutes

(1) Article 69(1) of the Restriction of Special Taxation Act (amended by Act No. 7322 of Dec. 31, 2004) which was enforced at the time of the transfer of the instant land by compulsory auction on April 10, 2004 provided that the amount of capital gains tax on income accruing from the transfer of the land directly cultivated by the resident prescribed by the Presidential Decree who resides in the location of the land for not less than eight years shall be reduced or exempted.

In addition, Article 66 (1) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 18704 of Feb. 19, 2005) which was enforced at the time of the above transfer provides that "resident prescribed by Presidential Decree residing in the location of the farmland" in the main sentence of Article 69 (1) of the Act means a person who cultivates the farmland while residing in the Si/Gun/Gu area (No. 1) adjacent to the above area and in the Si/Gun/Gu area (No. 2) adjacent to the above area.

The legislative intent of reducing or exempting capital gains tax for self-employed farmland for not less than eight years is to reduce the tax burden due to the transfer of farmland as part of land farming policies, and here, the term “self-arable of farmland” includes not only cases in which a person directly cultivates farmland but also cases in which a person makes a family member living or living together with the same household with respect to his own farmland (see, e.g., Supreme Court Decisions 94Nu11859, Feb. 3, 1995; 89Nu7412, May 11, 1990).

(2) On February 9, 2006, the amendment of the Enforcement Decree of the Restriction of Special Taxation Act was made pursuant to Article 66(12). Article 69(1) of the Act provides that “Direct farming” means that a resident is engaged in cultivating crops or growing perennial plants on his/her own land at all times or in cultivating or growing them with his/her own labor.

However, Article 66 (12) of the Enforcement Decree of the above Amendment was applied to the transfer after February 9, 2006, pursuant to Articles 1 and 10 of the Addenda of the above Amendment Enforcement Decree.

(3) Therefore, with respect to the transfer of the instant land by the Plaintiff, Article 66(12) of the Enforcement Decree of the above Amendment does not apply, and the law prior to the amendment is applicable.

On the other hand, the burden of proving the reduction or exemption requirement of capital gains tax is against a taxpayer who asserts it (see Supreme Court Decision 96Nu4060 delivered on November 12, 1996, Supreme Court Decision 2008Du7830 delivered on October 23, 2008).

(b) Fact of recognition;

In full view of the statements in Gap evidence 3-1, Gap evidence 4, 6 (including each number), Gap evidence 8, and 9, and the purport of the testimony in the court of first instance as well as the testimony in the court of first instance as follows.

C. GabE (E on January 2, 190) married GabG (E on February 18, 1924) with FF on July 5, 1928, and the FF died on March 16, 1932.

O) After that, on November 30, 1932, Park Jong-G was born by the Plaintiff (the Plaintiff on September 4, 1941), Park JJ (the date of November 13, 1946), and Park KK (the date of April 22, 1950), married with H on November 30, 1932 (the date of October 27, 190). After that, on December 22, 1965, Park Jong-G was entered as a person other than marriage.

O The instant land is 00 m2,000 m2, P,000 m2,000 m2, and the Plaintiff was born at 00 m2,00 m2,00 m2,000 m2,000.

O The Plaintiff acquired the instant land on March 16, 1957. At that time, the Plaintiff was enrolled in a high school, and was enrolled in a XX University located in Seoul, from March 1960 to February 2, 1964. After the university graduation, the Plaintiff delayed military service determination due to an injury with which the right handouts, and was living together with his parents at the same place as before and on October 20, 1968, and transferred his resident registration to the Seodaemun-gu Seoul, Seodaemun-gu, Seoul, 000-29.

O At the time of the Plaintiff’s attending a high school and a university, the Plaintiff’s parents were engaged in farming work on the instant land. The Plaintiff also engaged in farming work on the instant land with his parents after school, weekend or vacation, and continued to engage in farming work on October 20, 1968 after the Plaintiff graduated from a university until before he moved his resident registration to Seoul.

C. Determination

Examining the Plaintiff’s assertion in accordance with the above facts of recognition and relevant statutes, the following are as follows.

(1) On March 16, 1957, when the Plaintiff acquired the instant land on March 16, 1957, the Plaintiff’s parents were aged 57 years of age or 56 years of age, and the Plaintiff’s parents were more than 10 years of age or 6 years of age, and the Plaintiff’s births were less than 10 years of age or 6 years of age. In light of the fact that Park GG, which is a dual-type system, was entered in around 1965 only when the area of the instant land was entered in around 1965, it appears that family members, who were actually capable of cultivating the instant land, were high school students and the Plaintiff’s parents, and there is no other evidence to deem that the Plaintiff entrusted the management of the instant land to a third party other than the Plaintiff or the Plaintiff’s parents, or caused the Plaintiff to act by proxy by proxy. Thus, the Plaintiff appears to have been in the situation of helping the Plaintiff’

(2) The instant land is a answer, and it does not need to work every day to grow rice in the instant land, and it seems that the Plaintiff, who was in school, could have been engaged in agricultural work after school, weekends, holidays, or vacations. In particular, since from July to August, it is a vacation period, the Plaintiff could have been engaged in agricultural work on a regular basis during the said vacation period.

(3) Thus, the plaintiff can be deemed to have assisted the farming work of the parents living in the land of this case or conducted the farming work with their parents for at least two months, including the period from March 16, 1957 during which he was enrolled in high school until February 1960, and from March 16, 1964 to October 20, 1968 when he transferred his resident registration to Seoul from March 16, 1957 after he was enrolled in high school; and from March 16, 1964 to October 20, 1968 when he was enrolled in the university; and therefore, the plaintiff could have assisted the farming work of the parents living in the land of this case for at least eight months including the period from March 3, 1960 to February 196 when he was enrolled in the university of this case. Thus, it is recognized that the plaintiff had cultivated the land of this case directly or with his family members for at least two years from March 16, 1957 to October 28, 196.

(4) On the other hand, in cases where the above conditions of residence and direct cultivation are met for not less than eight years, the reduction or exemption provisions of the Restriction of Special Taxation Act and the Enforcement Decree of the Restriction of Special Taxation Act shall apply even if a person does not reside at the seat of farmland as of the date of transfer. Thus, even if the Plaintiff, which already meets the eight-year re-village and self-cultivation requirements, did not reside at the seat of the instant land on April 10, 2004, the time of transfer of the instant land, the Plaintiff may be granted reduction or exemption of capital gains tax pursuant

(5) Therefore, the instant disposition imposing capital gains tax on the Plaintiff without applying the above reduction or exemption provisions is deemed unlawful.

4. Conclusion

If so, the plaintiff's claim seeking the cancellation of the disposition of this case is justified, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed. It is so decided as per Disposition.