Cho High Court Decision 2013 Deputy 183 (24 April 2013)

Even though the mother who is in military service and university students have been engaged in farming activities while attending the school, it is not directly cultivated in farmland.

It is obvious in light of the empirical rule that a person could not cultivate farmland directly at the seat of the person in military service, and that he/she directly cultivated the farmland as he/she was present before and after the military expulsion or after attending a school, and he/she cannot be deemed as having been actually cultivated.

Article 70 of the Restriction of Special Taxation Act

Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act

2013Guhap1380 Revocation of Disposition of Imposing capital gains tax

The United States of America

○ Head of tax office

October 10, 2013

October 24, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax OOOO on January 7, 2013 is revoked.

1. Details of the disposition;

A. On April 21, 2004, the Plaintiff acquired 2/7 shares in OO-O-gun O-O-O-O-O-O, 462-1, 487-2, 503-3, 71-4, 71-7, and 72-5 (hereinafter “instant farmland”). The instant farmland was expropriated as a public site in the Ministry of Land, Transport and Maritime Affairs and Ulsan Metropolitan City between February 18, 2009 and December 1, 2009.

B. On June 26, 2009, the Plaintiff, along with the Plaintiff’s mother and birth, acquired an O-gun O-gun O-gun O-gun O-O-O-gun 158-8 square meters, 157.7 square meters, and on February 7, 2011, O-O-ri 125-11 square meters, 379.25 square meters, respectively (hereinafter “o-land”).

C. The Plaintiff filed an application for reduction or exemption of capital gains tax due to farmland substitute land with respect to the instant farmland at the time of filing a report on capital gains tax in 2009 and 2010. However, the Defendant imposed capital gains tax on the Plaintiff on January 7, 2013 on the ground that the Plaintiff did not directly cultivate farmland as the student status of the university around the time of the substitute land of the instant farmland, and thus, the Plaintiff did not meet the requirements for reduction or exemption of capital gains tax on substitute land.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 5, 6, Eul evidence Nos. 1, 2, 9, 10 (including additional numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

After acquiring the farmland of this case on April 21, 2004, the plaintiff's mother and her mother living together at the same domicile as her mother and her mother living together with the farmland of this case and her mother living together with her mother as her mother permitted time. Since the plaintiff directly cultivated the farmland of this case, the transfer income tax on the farmland of this case must be reduced or exempted. Even if the plaintiff does not own the farmland of this case, even if the farmland of this case inherited from her father was accepted, the plaintiff acquired the farmland of this case for her livelihood, acquired gains from transfer, did not engage in speculative farmland transactions. On the other hand, it is difficult to view the disposition of this case as a serious public interest necessity, while the plaintiff should have suffered enormous disadvantages in the disposition of this case, the disposition of this case is unlawful as it deviates from and abused discretion.

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Determination

1) Article 70(1) of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 921 of Jan. 1, 2010) and Article 67(1), (2), and (3)1 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22037 of Feb. 18, 2010) provide that “Where a person who resided in the former location of farmland for not less than three years and cultivated farmland while residing in the new location of farmland for not less than three years (two years where expropriated) within one year from the date of transfer of the previous farmland, “where the area of new farmland acquired is 1/2 of the area of farmland to be acquired or more than a third of the value of the transferred farmland, or 1/100 of the value of the farmland to be transferred, the amount of tax equivalent to 100/100 of capital gains tax shall be reduced or exempted.” This means that “The transferor of the previous land shall be a person liable to pay capital gains tax reduction or exemption, 95.”

2) Comprehensively taking account of the overall purport of the statements and arguments in Eul evidence Nos. 3 and 4, the plaintiff entered Ulsan National University on Mar. 3, 2003 and was in active duty service from Jan. 3, 2005 to Jan. 2, 2007, and graduated from the university on Aug. 19, 2011. Thus, it is obvious in light of the empirical rule that the plaintiff was unable to directly cultivate farmland at the seat of the farmland in this case during military service, and even if the plaintiff was in active duty of the mother who was going to go to school before or after the military school after his expulsion, it cannot be deemed that "direct cultivation" under Article 67 (2) of the former Enforcement Decree of the Restriction of Special Taxation Act is always engaged in the cultivation of crops or perennial plants on his own farmland, or by cultivating or cultivating at least 1/2 of the farming work through his own labor, and there is no other evidence to directly reduce or exempt farmland in light of the purport of this case.

3) Furthermore, even if the Plaintiff’s disposal of the farmland of this case is not limited to the acquisition of substitute farmland due to the expropriation of the farmland of this case, the instant disposition is not a discretionary act. The capital gains tax exemption system for substitute farmland should be operated in accordance with the purport of protecting farmers and promoting agriculture. The capital gains tax imposed on the Plaintiff is imposed on gains accruing from the actual transfer of the farmland of this case on the premise of income gained by the Plaintiff, and it is difficult to deem the instant disposition as a huge property damage to the Plaintiff, and there is a more public interest than the fairness of tax administration. In full view of the above, the Plaintiff’s assertion that the instant disposition is unlawful is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed. It is so decided as per Disposition.