Cho High Court Decision 2009J3037 ( October 12, 2009)

Whether to recognize the transaction price entered in the real estate register

Even if the transfer value of farmland is entered in the amount of transaction entered in the real estate register, the transfer value should be corrected at the verified price where the actual transaction amount is verified, by predicting that the transfer income tax is reduced or exempted; and the fact that the transfer value should be corrected.

1. The Defendant’s imposition disposition of KRW 300,503,420 against the Plaintiff on June 1, 2009 shall be revoked.

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

The same shall apply to the order.

1. Details of disposition;

A. On March 17, 1995, the Plaintiff acquired 2,787 square meters of paddy-gu AAri 280 m2,787 m2 (hereinafter referred to as “influent farmland”) in the Influence-gun of the Gyeonggi-do, which was transferred to ParkB on August 13, 2007.

B. On October 30, 2007, the Plaintiff filed a transfer income tax report with the transfer value of KRW 55.8 million as farmland directly cultivated for not less than 8 years. However, the Defendant denied direct farming and notified the transfer income tax of KRW 300,503,420 on June 1, 2009 (hereinafter “instant disposition”).

C. On June 16, 2009, the Plaintiff filed an appeal with the Tax Tribunal by asserting that “The actual transfer value is KRW 320 million, even if the family self-sufficiency was not recognized.” However, the Plaintiff was dismissed on October 12, 2009.

[Ground of recognition] Evidence No. 4-1, Evidence Nos. 1 and 2-1, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The assertion

The Plaintiff had resided in the location of the farmland and directly cultivated the farmland for at least eight years. Therefore, the instant disposition that did not reduce or exempt capital gains tax is unlawful.

Even if capital gains tax reduction is not recognized, the actual transfer value of the farmland at issue is KRW 320 million.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether a person directly cultivates

According to the main sentence of Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 9276 of Dec. 29, 2008) and Article 66(1), (4), and (12) of the Enforcement Decree thereof (amended by Presidential Decree No. 20620 of Feb. 22, 2008), in order to obtain a reduction or exemption of capital gains tax on self-arable farmland, the fact that the transferor resided in a location of the relevant farmland, such as a Si/Gun/Gu where the farmland is located, and has cultivated directly for not less than eight years from the time of acquiring the relevant farmland until the time of transfer. The term "direct cultivation" here means that the transferor is constantly engaged in cultivating crops or growing perennial plants on his/her own farmland or cultivating or growing them with his/her own labor.

In addition, the above provision, as part of the land farming policy called the preservation of farmland and the promotion of agriculture, provides the legislators with special benefits to farmers by reducing the tax burden due to the transfer of farmland by self-employed farmers for not less than eight years, and such preferential measures of tax reduction and exemption should be exceptionally permitted to the extent limited (see, e.g., Supreme Court Decisions 97Nu2090, Mar. 27, 1998; 2002Hun-Ba2, Sept. 19, 2002).

As to whether the Plaintiff was engaged in the farming business or engaged in the farming business on the key farmland at issue, it is difficult to obtain a long-term fixed wage and salary in theCC beverage (ju from March 17, 1995 to August 13, 207) during the period in which the Plaintiff owned the farmland at issue, and there is no evidence to prove that the Plaintiff was not engaged in the farming business on the basis of health stand, Gap evidence 5-1 to 14 (the farmland ledger, the certificate of cooperative membership, the certificate of cultivation facts, the sales by products of female agricultural cooperatives, the certificate of lease by agricultural organizations, etc.) as well as Eul evidence, in light of the following circumstances: (i) whether the Plaintiff was engaged in the farming business at issue or the entire purport of pleadings; (ii) whether the amount of direct payments for preserving rice income, etc. at issue is 2,787 square meters in the area of farmland and has not been engaged in the farming business at issue; and (iii) whether there is any other evidence to prove that the Plaintiff's direct production or lack of labor force.

2) Whether the transfer value was 320 million won or not

According to Gap evidence Nos. 1, 2, and 3, the sales contract was made on July 9, 2007, the date of the contract between the plaintiff, the purchaser KimF, and three other parties. The sales contract was made on July 9, 2007, and the purchase price of KRW 320 million was transferred from ParkB's deposit account to the plaintiff's deposit account. The fact that the transfer registration of ownership in the name of ParkBB on August 13, 2007 was completed on the issue of farmland. According to Gap evidence Nos. 7-4 to 10, the transfer price was expected to be reduced for the issue of farmland and the remaining transfer price was higher than KRW 320,000,000,000,000,000,000,000 won was more than KRW 500,000,000,000,0000,000,000 won.

3. Conclusion

Thus, the plaintiff's claim of this case is accepted on the ground of the reasons.