Cho High Court Decision 2012 Deputy 3641 ( November 29, 2012)

Any disposition denying the reduction or exemption of capital gains tax by deeming that the transfer of clan land does not fall under the self-sufficient farmland for not less than eight years is justifiable.

In the event of cultivation by proxy or commission cultivation without responsibility and calculation of a clan with respect to farming expenses, etc., it cannot be deemed that it constitutes direct cultivation. The fact that the farmland in this case was self-culed shall be proved by the plaintiff who asserts such fact. However, it is difficult to recognize such fact alone, such as each receipt presented by the

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

2013Guhap20057 Revocation of Disposition of Imposing capital gains tax

AAC Cze-friendly Association

○ Head of tax office

October 22, 2013

November 26, 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 the capital gains tax OOO on February 7, 2012 is revoked.

1. Details of the disposition;

The following facts are either disputed between the parties, or acknowledged by the purport of Gap evidence Nos. 1 through 6, evidence No. 7-1, 2, 3, Gap evidence No. 10, 26, 27, Eul evidence No. 1 and 2, and all pleadings.

A. On December 3, 1980, the Plaintiff purchased an OO-gun OO Eup (hereinafter referred to as "OO-type land before division") 79-2 forest land 17,058 square meters (hereinafter referred to as "land before division") in the name of seven persons, such as KimCC, which is a clan made up of AAAC ○○○○○○○○○ (AC 49 large descendants) 11 large descendants, KimB, and registered the ownership transfer of the said land under the name of the Plaintiff on June 13, 198.

B. On April 19, 2007, the number and land category were divided into 790-3 forest land of the same 790-3 forest land of the same Do on the same day on the same day, and on June 4, 2009, a part of the land was divided into the said 814-1 large 860 square meters on the same day, and on June 4, 2009, the remaining land was 814-1 large 304 square meters. The remaining land prior to the division was 98-1 forest land of the same 98-1 large 30 square meters on May 20, 2009 (hereinafter the above 814-1 large 304 square meters on the same day; hereinafter referred to as "814-1 forest land of the same 98-1 forest of the same 7,830 square meters on the same day; hereinafter referred to as "each of the above land").

C. On October 20, 2010, the Plaintiff transferred the instant land to OOOE on the ground of the expropriation, and on the ground that the instant farmland among the instant land (hereinafter “instant farmland”) constitutes a self-sufficient farmland for at least eight years as prescribed by Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010; hereinafter the same), and accordingly, reported the transfer income tax thereon to the Defendant by reducing and exempting OOOE members of the transfer income tax accordingly.

D. On February 7, 2012, the Defendant: (a) deemed that the instant farmland does not fall under one’s own farmland for at least eight years; and (b) did not grant a reduction or exemption thereon; and (c) imposed an OOO on the Plaintiff on February 7, 2012 and an OOOO of the capital gains tax and the special rural development tax

E. On May 7, 2012, the Plaintiff filed an objection with the Busan Regional Tax Office on February 7, 2012, but the Busan Regional Tax Office dismissed the said objection on May 29, 2012. The Plaintiff filed an appeal with the Tax Tribunal on August 20, 2012, but the Tax Tribunal dismissed the said appeal on November 29, 2012.

F. Meanwhile, on July 25, 2012, the Defendant applied the long-term holding special deduction under Article 95(2) of the Income Tax Act with respect to the transfer income of the instant land, and issued a decision of correction to reduce or exempt OOOO directors and special agricultural and fishing villages tax from among the dispositions on February 7, 2012, and accordingly, issued a disposition to reduce or exempt the transfer income tax, etc. to the Plaintiff on August 2012 (hereinafter in this case, the Defendant issued a disposition of imposition on the capital gains tax for 2010 remaining after the reduction or exemption as seen above among the dispositions on imposition of February 7, 2012 (=OOO directors - OOO directors) of the capital gains tax for 2010).

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since December 3, 1980, the Plaintiff acquired the land of this case, and thereafter after the death of KimD and KimD, the Plaintiff had Dong Jae-E establish a single farmer in the farmland of this case, received a payment for this money and appropriated part of the harvested agricultural products for the expenses necessary for the protection and management of the grave, and was provided and used at the time of the Plaintiff’s exercise. Therefore, it is reasonable to deem that the farmland of this case was directly cultivated by the Plaintiff as it was continuously used and cultivated for the above land from the time of its acquisition to the time of its sale, and that the disposition of this case on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The following facts may be acknowledged by comprehensively taking account of the respective descriptions in Gap evidence 8, 11, 12, 13, 15, 19, 20-1, 2, 21-1, 2, 3, 24-1, 2, 29 through 39, and 7, and the purport of the whole pleadings.

A) On February 7, 1987, the deceased Kim DD (hereinafter the deceased) moved into the building on the second floor of OO-si OO-dong No. 79-2, and resided in the building until March 4, 1992. The deceased Kim E-E, who was the birth of the deceased, was moved into the land before the division on April 25, 1995, and resided in the above building until the sale date of the land of this case.

B) The mid-term minutes (1978) state that the Plaintiff’s general meeting of January 2, 1989 stated that the Plaintiff shall rent the land before subdivision that was created as orchard at the time of the division to the Plaintiff for five years, and that the Plaintiff shall pay the rent of the OE per annum. In addition, the minutes of the above clan, the farmland ledger, and the real estate lease agreement include the lease of the land before subdivision from the Plaintiff, the KimE leased the land before subdivision from January 1, 1996 to December 30, 199, and the lease term from October 25, 2005 to October 131, 2004 was entered into between October 131, 201 and 11,570 square meters among the land before subdivision from December 30, 1996 to December 30, 199.

C) The KimE operated a reduction field on the land before the subdivision. In 2002, O was selected as a person eligible for agricultural product export promotion fund, in 2003, in 2004, and in 2005, he was selected as a person eligible for environment-friendly agricultural direct payment project with respect to the said reduction and received compensation. While operating the Switzerland-type farming center, he operated the Switzerland-type farming center, and sold a sense of identification manufactured by a reduction harvested from the land before subdivision and the land leased by others. At the time of expropriation, 200 pieces trees were planted on the land above 98-1.

D) The Plaintiff’s audit report (No. 32, 33, 34, 36 through 39) in 195, 1996, 197, 2002, 2004, 2005, and 2007 stated that Kim E paid the Plaintiff the amount of OE to the Plaintiff as a small fee for the land before the division. The Plaintiff’s clan Minutes (No. 30, 31 evidence No. 1983) included the Plaintiff’s resolution that the deceased decided to manage the OM as an OM’s management at the ordinary meeting of 1983, that the deceased passed the resolution that the deceased would be responsible for the entire share and share of the funeral and share of the deceased at the ordinary meeting of 1988.

D. Determination

1) Relevant regulations and legal principles

A) Article 69(1) of the former Restriction of Special Taxation Act provides, “The tax amount equivalent to 100/100 of transfer income tax shall be reduced or exempted with respect to the income accruing from the transfer of land prescribed by the Presidential Decree, among the land directly cultivated by a person who resides in the seat of a farmland for not less than eight years.” Article 66(13) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23590, Feb. 2, 2012; hereinafter the same) provides, “Direct farming” means that a resident is engaged in the cultivation of crops or perennial plants in his/her own farmland at all times or in the cultivation or cultivation of perennial plants with his/her own labor.”

B) In the case of the same clan as the Plaintiff, since it cannot be cultivated with its own labor, it can be viewed as direct cultivation in a case where a clan member cultivates farmland under the responsibility and calculation of a clan. However, it cannot be viewed as direct cultivation in the case where the farmland in this case was cultivated by surrogate cultivator or entrusted cultivation without the responsibility and calculation of the clan concerning farming expenses, etc. In addition, even if it is recognized that the farmland in this case was cultivated as farmland, it is not presumed that the Plaintiff, the owner of the farmland in this case, was presumed to have cultivated, and therefore, the fact that the farmland in this case was cultivated as farmland in this case must be proved by the Plaintiff asserting such fact (see, e.g., Supreme Court Decisions 92Nu11893, Jul. 13, 1993; 90Nu639, May 22,

2) According to the above facts, the fact that KimE, which is the plaintiff's clan, cultivated the farmland in this case from around 1994 to the time of the transfer of the farmland in this case, and resided in the land building before subdivision during the above period is recognized. However, it is difficult to view that the plaintiff directly cultivated the farmland in this case under his responsibility and calculation. Accordingly, the evidence additionally submitted by the plaintiff is examined in order to prove this.

3) Examining the facts confirmations and receipts submitted by the Plaintiff first, from 2007 to 2010, the fact confirmations and receipts (Evidence No. 42-1 to 10 of the Evidence No. 42-1 of the said Table) that KimE purchased rice, which is necessary for the Plaintiff’s exercise, and the fact confirmations and receipts (Evidence No. 44-1 to 5 of the Evidence No. 44 of the said Table) that KimE purchased music, which is necessary for the Plaintiff’s exercise; the fact confirmations and receipts (Evidence No. 45-1 to 6 of the Evidence No. 45-1 of the said No. 45-1 of the said Act) that KimE purchased 1-1 to 6-10 days for the Plaintiff’s exercise of the Plaintiff’s exercise of the Plaintiff’s exercise of the Plaintiff’s exercise of the H, II, II, Kim Jong-K’s receipt and receipt No. 1 to 47-20-414, each of the above receipts No.

However, in light of the above receipts and confirmation documents, since 2007, each purchaser of the goods, etc. was issued after the lawsuit of this case was filed, and the method of recording was also possible, and KimE managed the Plaintiff's financial affairs and stated in the Plaintiff's audit report that the Plaintiff's exercise expenses were paid as clan funds, the above evidence alone is insufficient to recognize that the harvested material of this case was used as expenses for clan events.

4) Next, the witness statement (Evidence No. 40) and the witness KimE’s testimony made by Kim E-E are deemed to be the testimony of the deceased. The KimE made a statement or testimony to the effect that “E-E has been in charge of the Plaintiff’s financial affairs while cultivating the above land for about 30 years since around 1984, such as cultivating a shot on the land before division with the deceased, and cultivating it independently from 1992, after KimD died, KimD’s death. From around 1992, the sales from cultivating a shot are OO members a year, and among them, the OOO members are paid to the Plaintiff as rent, and it is difficult to view that the remainder of the OOOO members except for expenses incurred in cultivating a shot as expenses incurred in the care, management, and removal of graves from the cultivation of the land before division.” However, KimE merely paid OO members at the expense of a tomb, management, and removal from the remainder of the Plaintiff and the present farmland.

5) In addition, there is a clan minutes (No. 30) and a Kim E-E confirmation document (No. 3) stating that the deceased was responsible for the work of managing graves, rooms, description preparation, etc. in return for cultivating the land before the division, while cultivating the land before the division. However, in light of the above circumstances, it is difficult to believe that the deceased was de facto cultivated, and there is no other evidence to prove that he directly cultivated the farmland of this case under the Plaintiff’s responsibility and calculation.

6) Therefore, the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.