Early High Court Decision 201J 0454 ( October 14, 2011)

3년 이상 종전 농지를 직접 경작하뎠다고 인정하기 어려움

Considering the fact that a person works for a driving school and obtains wage and salary income, that a third party states that farmland is the actual farmer of farmland, that a third party fails to disclose the accurate supply details of cultivated rice, and that a person fails to present direct and objective data on the fact of cultivation, etc., it is difficult to recognize that the previous farmland was directly cultivated for at least three years.

2011Guhap1028 Revocation of Disposition of Imposing capital gains tax

XX

Head of Pyeongtaek Tax Office

October 21, 2011

November 4, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 105,656,945 for the Plaintiff on August 1, 2010 shall be revoked.

1. Details of the disposition;

A. On June 17, 1999, the Plaintiff acquired and owned a lot of 1,514 square meters in the Dongdong-si, Y 00-0 m2, 000-0 m2, 1,504 square meters in the same Ri, and a lot of 000-0 m200 m2 in the same Ri (hereinafter referred to as “the instant piece of farmland”) and transferred it to the Korea Land Corporation on the ground of purchase of public land on June 22, 2009.

B. Accordingly, on August 28, 2009, the Plaintiff filed a preliminary return on the tax base of capital gains tax following the transfer of the farmland in this case with the Defendant, while the said farmland constitutes “self-arable farmland for not less than eight years” under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter “Special Taxation Act”). Accordingly, the Plaintiff filed an application for capital gains tax reduction or exemption.

C. After that, on October 5, 2009, the Plaintiff acquired the 000-0 m2,592 m2 and 696 m20-0 m2 as the substitute farmland from Pyeongtaek-si as the substitute farmland.

D. Meanwhile, on August 1, 2010, the Defendant excluded the Plaintiff from the application for reduction or exemption on the ground that the Plaintiff did not directly cultivate the instant farmland, and applied the reduction or exemption provisions on land, etc. for public services pursuant to Article 77 of the Restriction of Special Taxation Act, and notified the Plaintiff of KRW 105,656,940 (including additional taxes) of the transfer income tax for the year 2009 (hereinafter “instant disposition”).

E. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on November 1, 201, and filed an appeal with the Tax Tribunal on January 11, 201, but was dismissed on April 14, 201.

[Ground of recognition] Unsatisfy, Gap evidence 1, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff's assertion

The Plaintiff acquired the farmland of this case and cultivated it directly from around 2001 to the time of transfer, and acquired and cultivated the substitute farmland of this case after transfer. As such, the income from the transfer of the farmland of this case is subject to reduction of capital gains tax due to farmland substitute land under Article 70(1) of the Restriction of Special Taxation Act, but the disposition of this case on different premise is unlawful (the Plaintiff alleged that the farmland of this case was the farmland of this case as its own farmland under Article 69 of the Restriction of Special Taxation Act, but argued that it constitutes farmland substitute land under Article 70 of the Restriction of

(2) The defendant's assertion

Since the Plaintiff did not directly cultivate the farmland of this case for not less than three years but did not reside or cultivate in the substitute farmland of this case, the disposition of this case seems to be legitimate and acceptable.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) According to Article 70(1) of the Restriction of Special Taxation Act 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, Feb. 18, 2010; hereinafter “Enforcement Decree of the Restriction of Special Taxation Act”), in a case where a person who resided in the former location of farmland for not less than three years and cultivated while residing in the former location of farmland for not less than three years within one year (two years after purchase by consultation) from the date of transfer of the previous farmland while residing in the new location of farmland for not less than three years, the tax amount equivalent to 10/100 of the transfer income tax shall be reduced or exempted with respect to the income accruing from the substitute farmland of farmland where the area of newly acquired farmland is not less than 1/2 of the area of the farmland to be transferred or where the value is not less than 1/3 of the transferred farmland value

The purport of the above provision is to allow and guarantee free substitution of farmland to protect farmers, or to develop and encourage agriculture. Therefore, the acquisition and sale of farmland after the acquisition of farmland should be limited to the case for the purpose of substitute land for cultivation. Therefore, the requirements for reduction or exemption of capital gains tax due to substitute land for farmland should be farmland. ① The previous land and new land shall be farmland; ② the previous land and new land shall be farmland shall be directly cultivated while residing in the previous land location for not less than three years; ② the previous land shall be resided in the new land location for not less than three years; ③ their residence and cultivation shall begin within one year (or two years) from the date of transfer; ④ The period between the previous land transfer date and the acquisition date of new land shall be within one year (or two years). ⑤ The area of newly acquired farmland shall be more than one-2 of the area of farmland, or more than one-third (see, e.g., Supreme Court Decisions 95Nu3695, Sep. 29, 195; 2005Du594, Feb. 295, 2005).

In addition, the term "direct cultivation of farmland" is to realize the purpose of legislation to protect or encourage the owner of farmland's leading cultivation (see Supreme Court Decision 2010Du8423, Sept. 30, 2010). It means that a resident engages in the cultivation of crops or the growing of perennial plants on his/her own farmland at all times or who cultivates or cultivates with his/her own labor not less than half of the cultivation of crops or perennial plants on his/her own farmland, and the fact of such farmland's own cultivation must be proved by a person who asserts it (see Supreme Court Decision 94Nu996, Oct. 21, 194).

(2) Whether the farmland in this case is directly cultivated

Although there was a witness KimB’s testimony to the effect that the Plaintiff was directly a rice shed in the farmland in this case and KimB was merely a receipt of personnel expenses from the Plaintiff for the use, etc. of agricultural machinery, it is difficult or insufficient to recognize the Plaintiff’s direct cultivation in light of the following circumstances, which are acknowledged by comprehensively considering the overall purport of the pleadings in each of the evidence No. 1, No. 2 and No. 3, and there is no other evidence to acknowledge it.

In other words, the plaintiff acquired the farmland of this case from 200 to 200, 100, 200, 200, 300,000 won or more per annum from 200, 300,000 won or more per annum from 200,000, 40,000 won or less from 200,000 won, and 40,000 won or more from 20,000,000 won or more from 20,000,000 won or more from 30,000,000 won, and 4,000,000 won or more from 10,000,000 won or more from 10,000 won, and it is difficult for the plaintiff to directly purchase the farmland of this case, and there is no possibility of the plaintiff's new statement about the farmland of this case to 10,000 won or more from 20,000 won.

(3) Whether to cultivate the substitute farmland of this case

The evidence that corresponds to the fact that the Plaintiff cultivated the substitute farmland of this case includes a statement of witnesses (No. 2) made by EDR that the Plaintiff is cultivating each of the instant substitute farmland of this case, but this is difficult or insufficient to recognize the Plaintiff’s self-defense in light of the following circumstances that are acknowledged by adding the aforementioned evidence and the purport of the entire pleadings to the statement in No. 3, and there is no other evidence to acknowledge it (However, Pyeongtaek-si where the substitute farmland of this case is located is connected to Chungcheongnam-do, Chungcheongnam-do, where the Plaintiff resides, satisfying the requirements of residence).

In other words, the Plaintiff acquired the substitute farmland in this case: (i) was earned income by the year 2009; (ii) the substitute farmland in this case adjacent to the Myeoncheon-gun, Chungcheongnam-gun, Chungcheongnam-do, the Plaintiff transferred on June 10, 201, which is about 47.05km, which requires a volume of 1 hour and 3 minutes at the time of moving to a vehicle; (iii) the Plaintiff is over 70 years old; (iv) the area of the substitute farmland in this case is equal to a total of 3,28 square meters; and (v) the Plaintiff was growing rice plants from the substitute farmland in this case, the land category of which is also difficult to obtain it; and (v) the Plaintiff did not present any objective evidence proving the fact that the Plaintiff had cultivated seeds and fertilizers used for the substitute farmland in this case, the details of purchasing seeds and fertilizers plants, and the details of using agricultural machinery and appliances, etc.; and (v) it is difficult to recognize that the Plaintiff was engaged in cultivating or cultivating the substitute farmland in this case for more than 3 years.

(4) Therefore, the Plaintiff is deemed to have failed to meet the requirements for reduction and exemption of capital gains tax due to substitute land for farmland, and on the same premise, the instant disposition against which the Defendant imposed capital gains tax on the Plaintiff on the transfer of the farmland in this case is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.