The reduction or exemption of farmland in lieu of farmland shall be directly cultivated at the time of transfer.

The disposition of this case denying the application of the provision on reduction and exemption of farmland on the transfer of this case by deeming that the transfer did not directly cultivate the land at the time of transfer is legitimate.

Article 70 of the Restriction of Special Taxation Act

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

2014Guhap21235 Revocation of Disposition of Levying Transfer Income Tax

Doz.

○ Head of tax office

April 29, 2015

May 27, 2015

1. The Defendant’s imposition of KRW 113,267,540 against the Plaintiff on July 1, 2013 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On December 30, 199, the Plaintiff completed the registration of ownership transfer in its future with respect to ○○○○○○-○○○-○○ orchard 13,486 square meters on December 30, 199. Thereafter, the said land was divided into ○○○-○○, 874 square meters, and ri○○○-Yan orchard 6,612 square meters on the same Ri (hereinafter referred to as “instant land”).

B. On May 30, 201, the Plaintiff entered into a sales contract with 500 million won with respect to the instant land (Evidence 2-3), and completed the registration of ownership transfer (hereinafter “transfer in this case”) on July 6, 201, and on July 6, 201, the Plaintiff completed the registration of ownership transfer (hereinafter “instant transfer”).

C. On September 30, 201, the Plaintiff calculated the tax amount by applying the provisions on reduction and exemption of farmland pursuant to Article 70 of the Restriction of Special Taxation Act and Article 67 of the Enforcement Decree of the same Act while filing a preliminary return and payment of capital gains tax on the transfer of this case to the Defendant (No. 2-2).

D. On November 28, 2011, the Plaintiff completed the registration of ownership transfer in its future on the ground of trading on the 21st day of the same month with respect to the ○○○○○○-○○○○○○, 4,350 square meters of the instant land, as a substitute farmland for the instant land.

E. Around April 2013, the Defendant issued a prior notice of taxation that the Plaintiff did not directly cultivate the instant land at the time of the transfer of the instant land, that the lessee Kim○○ was deemed to have cultivated Ma in the instant land, and denied the application of the provision on reduction and exemption of farmland on the determination that the lessee Kim○○ cultivated Ma in the instant land, and that on April 30, 2013, the Defendant imposed capital gains tax of KRW 113,267,540 on the Plaintiff for the year 201.

F. Accordingly, the Plaintiff filed a request for pre-assessment review on May 27, 2013, but the Defendant rendered a non-adopted decision on June 21, 2013, and issued a correction and notification of capital gains tax amounting to KRW 113,267,540 (including additional tax) for the Plaintiff on July 1, 2013 according to the pre-announcement of taxation (a evidence No. 2, No. 5, hereinafter “instant disposition”).

G. The Plaintiff filed an objection on July 23, 2013, but was dismissed on August 28, 2013. The Plaintiff filed an appeal on November 19, 2013, but the Tax Tribunal decided to dismiss the application on March 4, 2014.

Facts without dispute over the basis of recognition, Gap evidence 1 through 3, 9, Eul evidence 1, 2, 4 through 8, 11 (including each number), and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The parties' assertion

1) The plaintiff's assertion

From January 1, 2007 to December 31, 2009, the Plaintiff leased the instant land to Kim○○. From the expiration of the said lease term to November 201, 201, the Plaintiff directly cultivated and harvested marina in the instant land. The Plaintiff leased agricultural machinery, etc. necessary for marina farming from Kim○○○, obtained information on the methods of marina farming, and sold marina seeds to Kim○○, New ○○, etc. The Plaintiff prepared a confirmation document that the Plaintiff directly cultivated marina in the instant land at the time of the instant transfer. Nevertheless, the Plaintiff’s direct cultivation was not recognized, and the Defendant’s disposition denying the application of the provision on reduction and exemption of farmland on farmland as to the instant transfer was unlawful.

2) The defendant's assertion

In order to have capital gains tax reduced or exempted pursuant to the farmland substitute land reduction or exemption provision, the Plaintiff must prove that he directly cultivated the land at the time of the transfer (as of July 6, 201). However, the Plaintiff asserted that (i) on December 31, 2009, the term of lease expires, and (ii) on January 1, 2007, 200 to December 31, 2010, the term of lease of the instant land by Kim ○○ was confirmed as the farmland ledger, and (iii) on December 31, 2007, the Plaintiff could not be deemed to have directly cultivated the instant farmland, in light of the fact that the Plaintiff could not have paid labor expenses for marina farming and that there was no other evidence that the Plaintiff could have directly cultivated the instant farmland at the time of the transfer of the instant land.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) According to the farmland ledger against the Plaintiff, as of July 7, 2011, the farmland owned by the Plaintiff is all 15 pieces, and the farmland cultivation status column is 14 piece of land among them is 'self-fluence', and the remaining one piece of land (the land before the division of the instant land: 00 ○○○○-ri, ○○-ri, 13,486 square meters: ○○○, ○○, ○○-ri, 13,486 square meters): The details of the present status of farmland cultivation are as follows.

Classification

50

Answer

An orchard:

Other

guidance.

Number of parcels

Area of a square meter;

Number of parcels

Area of a square meter;

Number of parcels

Area of a square meter;

Number of parcels

Area of a square meter;

Number of parcels

Area of a square meter;

Ownership

5

17,822

2

2,369

7

792

1

3,967

15

24,950

J. J. M. M.

4

4,336

2

2,369

7

792

1

3,967

14

11,464

Lease

1

13,486

1

13,486

2) The term "the current status of farmland owned" in the above farmland ledger refers to the above ○-○○○" as the tenant with respect to the above ○○-○ land, the term of lease from January 1, 2007 to December 31, 2010 (No. 2-6), and the Kim○ is a person who cultivates "the ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ in a large scale on a mutual basis.

3) In the process of investigating the transfer income tax against the Plaintiff, each written confirmation prepared by the transferee ○○, the former lessee ○○, ○○○○○○, and the ○○○○○○○○○○○○○, respectively,

【○○’s confirmation on April 11, 2014 (No. 10 Certificate)

At the time of the acquisition contract in May 201, 201, ○○○○ ○○○-Seari 6,612 square meters was growing on the above land at the time of the acquisition contract, and it was confirmed that, at the time of the sale contract, a person cultivated at the time of the purchase and sale contract was harvested, and that a sales contract was made.

4. A certificate of April 12, 2014 (No. 11, 11 pages)

○○○○○○○○○ ○○○-○○ (a tree dry field) was leased rent on the condition that the said dry field is leased for three years from January 2007 on condition that tree will be removed. Moreover, on December 30, 2009, the dry field was returned on the 200,000 won per math, and the dry field was harvested on November 2009.

Ma○○○’s certificate on April 15, 2014 (No. 9)

In July 201, ○○○○○○○○○-Baley orchard, which was owned by the Plaintiff, and sold around July 201, was cultivating ma at the time of sale and purchase, and at the time of sale and purchase, ○○○○○○○-○○○-Baley orchard, ○○○○○, which was owned by the Plaintiff, and was growing mama on a leased farmland from ○○ Farmwon (Gla○) at the time of sale and purchase.

4) From this legal point of view, Kim○-○ cultivated ever on January 1, 2007 to December 31, 2009 by leasing the instant land from the Plaintiff, and the term of lease expires, and returned the land to the Plaintiff after the occurrence. The fact that the term of lease in the farmland ledger is four years to 2010 is due to the mistake in the report and preparation process, and is different from the fact. After the expiration of the term of lease in this case, the Plaintiff appeared to grow directly in the instant land, and notified the Plaintiff of the method of cultivation, and lent equipment such as high-priced Trackter, etc.

On December 2011, the plaintiff testified that the amount of 200 boxes were purchased from the seeds of the ornamental products cultivated by the plaintiff, and that 9.8 million won was deducted from the user fee of equipment.

5) In ○○○○○, a new ○○○○, growing ma in ○○○○, was aware of the fact that she leased the instant land from the Plaintiff and returned the instant land to the Plaintiff at the end of 2009. Since then, she tried to grow the Plaintiff’s mariage, including dry field, cutting down a dry field, cutting down a powder, and cutting mari, etc. On November 201, 201, the Plaintiff purchased 50,000 won of wage and paid KRW 1.5 million after deducting wage from the Plaintiff. Kim Il-ri in neighboring villages was aware that the Plaintiff purchased the seed ma from the Plaintiff. In ○○○ testified, she testified that she had a number of households growing ma in a small scale with equipment.

6) From this court around July 201, 201, the largest ○○ does not have a direct way to cultivate Ma in the instant land. Around April 15, 2013, a written confirmation of April 15, 2013 was written by a tax official who was on-site investigation in the village and had been confirmed to Ma○○○. At the time, ○○ talked about about about about 10 minutes with a tax official and a prior election. In the instant land, ○○ cultivated Ma, but the Plaintiff was directly Ma○, and thereafter, ○○ was Ma○. The ○○ testified that the Plaintiff leased equipment to grow Ma on a small scale, and that most of Ma○ was known to be being sold by an individual.

7) The transferee’s right of the instant land ○○ testified that the Plaintiff would perform the first work when he/she found the instant land after leaving to purchase the instant land in this court. The Plaintiff testified that “a person who cultivates horses” as stated in the letter of confirmation of April 11, 2014, prepared by Jeong○○○, was the Plaintiff. The reason for the purchase of the instant land except for crops (ma) was due to the lack of knowledge about markets, etc., and that there was no intention to purchase the instant land.”

Facts which have no dispute over the basis of recognition, each entry in Eul's Evidence Nos. 2, 9 through 11, and 14 (including various numbers), witness Kim-○, new ○○, last ○○, and the purport of the whole pleadings, and the purport of the whole pleadings.

D. Determination

1) Relevant regulations and legal principles

Article 70 (1) of the Restriction of Special Taxation Act provides that the tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted on income accruing from substitute farmland which falls under cases prescribed by Presidential Decree by a resident prescribed by Presidential Decree who resides in the seat of farmland in such manner as prescribed by Presidential Decree due to the necessity for cultivation, and Article 67 (2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24368, Feb. 15, 2013; hereinafter the same shall apply) provides that "Direct farming in such manner as prescribed by Presidential Decree" in the main sentence of Article 70 (1) of the Act means that a resident engages in cultivating or growing crops or growing perennial plants on his/her own farmland at least half of the farming work with his/her own labor, or "cases prescribed by Presidential Decree" in Article 70 (1) 2 of the Act means cases where a person who resides in the seat of farmland in such farmland for at least three years and has newly acquired at least one-half of the value of new farmland within one year from the acquisition date of farmland (referring to at least three years.

Meanwhile, the burden of proof on the direct cultivation of the transferred land as a requirement for reduction of capital gains tax on self-arable land is against the person liable for tax payment who asserts reduction or exemption of capital gains tax (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002).

2) In light of the following circumstances, it can be acknowledged that the Plaintiff directly cultivated the instant land at the time of the instant transfer, in light of the fact that the Plaintiff directly cultivated the instant land at the time of the instant transfer, each of the aforementioned evidences, as well as Gap evidence Nos. 4 through 8, 12, and 13 (including each number), and the overall purport of the pleadings.

Therefore, the defendant's imposition of the transfer income tax of this case, which denied the application of the farmland substitute land reduction and exemption provision on different premises, is unlawful, and the plaintiff's assertion is with merit.

A) The Plaintiff owned 15 lots of land, including the instant land, as a professional farmer having no other occupation. The Plaintiff asserted that the instant land was leased to Kim ○○, but the Plaintiff was a marina company after having been returned on December 31, 2009. However, even after the lease period was terminated on the part of a professional farmer, the Plaintiff’s claim is natural. The Plaintiff’s assertion is very natural to deem that even if the Plaintiff leased his own farmland to another person but the lease contract was terminated, it would still be possible for him to recover the farmland, and that the size of the land cultivated by the Plaintiff alone could not be deemed to have been enough to stop the farmer’s house.

B) On December 31, 2009, Kim ○, who was a person who cultivated and cultivated the instant land from the Plaintiff, and was aware of the fact of the case most accurately, returned the instant land to the Plaintiff after the expiration of the lease period, and thereafter, he testified clearly that the Plaintiff had cultivated the instant land directly. Kim ○ stated that the Plaintiff returned the instant land to the Plaintiff on December 31, 2009, consistently from the tax investigation process with respect to the Plaintiff to this court.

C) A person who cultivated the instant land from this Court to this Court in 2011 was testified as the Plaintiff, his testimony is specific and natural, and there is no reason to reject credibility.

D) Meanwhile, on the other hand, the confirmation document drawn up by ○○○ on April 15, 2014, stating that Kim○○, not the Plaintiff, was cultivated on the instant land at the time of the instant transfer. However, according to the statement made by ○○○ in this court, the above confirmation document was accepted by ○○○○ that the investigating official had already verified to Kim○○, and that it was merely accepted by her maximum ○○○, and that it was difficult for ○○○○ to accurately memory and accurately memory about about 1 year and 9 months prior to the investigation official, while she talked about about 10 minutes with 10 minutes, and ○○ testified to the effect that the contents of the above confirmation document were not true in this court, it is difficult to believe the above contents as it is.

E) The Defendant requires considerable expertise in order to cultivate Ma, and requires high-priced equipment, such as Trackers, so it is difficult for the Plaintiff to deem that the Plaintiff cultivated Ma in the instant land, and there is no objective evidence as to the details of shipping Ma. However, according to the testimony made by the Kim○○ and New ○○ in this court, the Plaintiff obtained information on farming methods from neighboring marina farmers, such as Kim○○ and New ○○○, etc., and borrowed Track, if necessary, from Kim○, if there are many farmers who grow Ma in a small scale in calculating the period in which the instant land is located, the fact that the Plaintiff sold Mac to Kim○, New ○○, and Kim Jong-chul.

F) The Defendant asserts that the Plaintiff’s assertion and testimony of Kim ○○ is not reliable on the ground that the expiration date of the lease term under the farmland ledger differs from that of the Plaintiff’s assertion. However, according to Kim ○○ testimony, it appears that the Plaintiff’s direct cultivation of the instant land in the farmland ledger as of December 31, 201 appears to be due to mistake ( insofar as the issues of the instant case are direct cultivation around July 201, the Plaintiff appears to be due to the fact that the expiration date of the lease term is 209 years, or 2010 years, or 2010 years, there seems to be no reason to claim the lease term different from the fact, and even if the actual lease term is until December 31, 2010, such circumstance alone is insufficient to prove that the Plaintiff directly cultivated the instant land as of December 7, 2011, the expiration date of the lease term.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.