Early High Court Decision 2009J3067 ( October 26, 2009)

Whether income from the transfer of forest trees among the transfer of forest land is forest income.

Among the forests and fields, it cannot be deemed that the forest land and the forest are subject to separate transactions or that the value of the forest trees is calculated and included in the purchase price of the forest land, so it cannot be deemed that the forest income, which is the income from the transfer of the forest,

The contents of the decision shall be the same as attached.

○ Of species ○

The director of the tax office

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on June 5, 2009 is revoked.

1. Details of disposition;

A. On May 21, 2005, the Plaintiff transferred a parcel of land such as 32,875.71 square meters, etc. to ○○, a housing construction and sales business entity, ○○, Inc. (hereinafter “non-party company”), △△△△-1, 32,875.71 square meters, etc., and paid capital gains tax to the Defendant on June 30, 2005 based on the actual transaction price.

B. On April 3, 2009, the Plaintiff filed a request for correction to refund KRW 2,427,507,150 among the transfer income tax paid by asserting that income from the transfer of trees located in the △△△△-1, 2, 3, 3, 6, 8, 8, 9, 9, and 11-4 forest land located in ○○-dong, ○○-dong, 11-4, 150 (hereinafter “instant forest land”) should be taxed as forest income, not income.

C. The Defendant rejected the above competition claim on the ground that the transfer of forest trees on June 5, 2009 was conducted in the feasibility of business in order to see it as forest income, and that it was deemed that only the land value was paid without calculating the forest trees value at the time of the initial transfer of forest land in this case, and it cannot be deemed as forest income (hereinafter “the instant disposition”).

D. On July 31, 2009, the Plaintiff filed a request for a trial with the Tax Tribunal, but the said request was dismissed on October 26, 2009.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 7, Gap evidence 19-1, 2, Eul evidence 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff principal

The Plaintiff paid the transfer income tax at the time of transferring the forest of this case, but the transfer of the forest of this case was transferred along with the forest of this case for more than five years, separate from the forest land. Thus, the part on the forest land should be taxed as forest income regardless of the feasibility of the transfer income and the part on the forest trees should be taxed as forest income regardless of the feasibility, and the remaining 1.5 billion won after deducting approximately 3.1 billion won of the standard market value of the forest land among the total transfer value of 18.7 billion won reported by the Plaintiff pursuant to Article 43(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890, Feb. 28, 2007) shall be deemed as the transfer value of the forest of this case. Accordingly, the transfer income tax on the transfer of the forest of this case

(b) Details of the relevant statutes (attached Form 2);

According to Article 4(1)4 of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006); Articles 23(1) and 19(1)1 (amended by Act No. 8144, Dec. 30, 2006); Article 43(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890, Feb. 28, 2007) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890, Feb. 28, 2007); ① Forest income is income generated from separate bonds or transfer of forest land in which the afforested period is less than five years; ② Income falls under forestry among business income if the afforested period is less than five years; ③ Income generated from continuous and repeated transfer of standing timber in a natural status without extinguishing it constitutes income from a profit-making business.

C. Issues and determination

1) Issues

According to the allegations and relevant statutes, the issue of the instant case is whether the instant forest meets the requirements for imposing forest income tax on the part of the instant forest land, and in this regard, whether the instant forest land has been traded separately from the forest land among the instant forest land, or whether the value of forest trees has been calculated in the purchase price of the instant forest land, and further, whether the instant forest land transferred by the Plaintiff had been planted separately for not less than five years.

2) Determination

In this case, considering the following facts and circumstances, evidence Nos. 2-1 and 5-3, and evidence Nos. 5-4 (as of September 15, 2010, evidence attached to Plaintiff’s written evidence attached to Plaintiff’s written evidence, and evidence attached to Plaintiff’s written evidence Nos. 5-1, 2010) and evidence Nos. 19-2, evidence No. 19-2, witness Kim-type testimony, as a whole, and the overall purport of pleadings, it cannot be deemed that the Plaintiff satisfied the taxation requirements of forest income solely on the ground that the Plaintiff had a forest land transferred to Nonparty Company and the economic value could be recognized. Thus, the Plaintiff’s assertion is without merit, and the Defendant’s disposition of this case is lawful.

A) The contract between the plaintiff and the non-party company for the sale of the forest of this case on September 9, 2003 and June 1, 2004 on each of the sale contracts between the plaintiff and the non-party company stated only the subject matter of the sale as a whole, such as land, buildings, superficies, etc., and did not appear entirely.

In addition, the sales amount under the above sales contract is determined by multiplying the area of each land by 5.7 million won per square meter, and there is a forest tree for not less than 5 years claimed by the plaintiff, and there is no difference between the forest of this case and the other forest land.

The non-party company purchased the forest land of this case in order to build a new house, and the forest land of this case in the forest land of this case should not be economically valuable with respect to the forest land of this case, but be used for the road or for other purposes, and it should have taken into account that the separate collection cost of the forest trees or the transfer cost of the forest trees will be paid. Thus, the non-party company deemed that it did not

In light of the contents of the above sales contract, the calculation of the sales price, the purpose of the purchase by the non-party company, and the details of the use of the forest land in this case after the purchase, etc., it cannot be deemed that the forest land and the forest trees among the forest land in this case were subject to separate transactions, or that the forest land in this case was included in calculating the value of forest trees in the purchase price of the forest land in this case, and thus, the

B) Meanwhile, according to the results of the confirmation of the ledger of self-afforestation on February 19, 2009, among the instant 7 parcels of forest land, the forest income tax for the forest land of this case was each afforested on the ground of △△△△△-1-1, 1958 (1958), 10,600 copies of original trees (1958), 400 copies of original trees (1994), and 2,000 copies of night trees (1963) on the same 2nd ground of the same mountain (1994), and there is no fact of afforestation in the remaining forest land, and there is no fact that the Plaintiff has already paid the forest income tax for the forest land of this case.

In light of the above planting status of the forest trees, the reporting record of the forest income tax, and the Plaintiff’s clan, etc., it is insufficient to view that the forest trees in this case were afforested (a separate forest) or the afforestation period has elapsed for not less than five years.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed for reasons.