Plaintiff (Law Firm Geumsung, Attorneys Jeon Dong-dong et al., Counsel for the plaintiff-appellant)

Chuncheon Director of the Tax Office

January 19, 2011

Chuncheon District Court Decision 2010Guhap489 Decided June 24, 2010

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition rejecting the correction of capital gains tax against the plaintiff on January 29, 2009.

1. Details of the disposition;

As to this part, Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act cites paragraph (1) of the judgment of the first instance as it is.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff, in the forest of this case, is running a forestry business by afforested shot trees and growing them together with the forest of this case. Pursuant to Article 51(8) of the Enforcement Decree of the Income Tax Act, the part pertaining to the transfer of forest land among income from the said transfer should be subject to separate taxation as capital gains, and the part pertaining to the transfer of forest trees should be subject to separate taxation as business income. Thus, the disposition of this case refusing the plaintiff's request for correction for separate taxation is unlawful.

B. Relevant statutes

As to this part, Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act cited Article 2(b) of the judgment of the first instance as it is.

(c) Markets:

Article 94(1)1 of the Income Tax Act provides that income generated from the transfer of land or a building shall be deemed capital gains, Article 19(1)1 of the Income Tax Act provides that income generated from forestry shall be deemed business income, and Article 51(8) of the Enforcement Decree of the Income Tax Act provides for the calculation method of total income in calculating the business income generated from engaging in forestry. Therefore, in order to impose separate taxation pursuant to Article 51(8) of the Enforcement Decree of the Income Tax Act, the transfer of trees shall fall under the forestry, i.e., the business, and if not, the income from the transfer of trees shall be deemed as included in the income from the transfer of land, and Article 94(1)1 of the Income Tax Act shall apply.

In light of the fact that the sales contract (No. 7) prepared between the plaintiff and the non-party company with respect to the forest of this case only includes the special terms on graveyard transfer, and there is no content as to the trees on the ground, and thus, the plaintiff cannot be deemed to have used the above trees as a separate transaction object in the above sales contract, and there is no evidence to prove that the plaintiff separately operated the forestry, and there is no registration of the business concerning the forestry, and the above trees do not have the registration or the name of the person in accordance with the laws on the standing timber, it is reasonable to view that the trees on the land of this case are not transferred in the course of the plaintiff's operation of the forestry as business, but only part of the land as the forest of this case was transferred as part of the forest of this case. Accordingly, the disposition of this case under the premise that the income from the transfer of trees is subject to the transfer income tax following the transfer of forest of this case is legitimate.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance is just with this conclusion, and the plaintiff's appeal of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Yoon Jae-sik (Presiding Judge)