Cho High Court Decision 2014Nu0254 (O4.21)

It is difficult to recognize as having cultivated farmland directly for not less than eight years.

In light of the fact that the certificate of vicarious cultivation was prepared while he works as a taxi engineer, the fact that another person is listed in the application for direct payments compensating for rice income, etc., and the fact that the details of expenses disbursed for the cultivation of the land of this case are not verified in preparation for the area of the transferred land, etc., it is difficult to recognize that it

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

2014Guhap20665 Revocation of Disposition of Imposing capital gains tax, etc.

DelegationO

O Head of tax office

August 26, 2014

October 2, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 000 on September 1, 2013 against the Plaintiff on September 1, 2013 shall be revoked.

1. Details of the disposition;

A. On June 18, 2010, the Plaintiff transferred 6,741 square meters in total to AA, an O-dong O-dong O-dong O-dong O-dong O-dong O-dong, and 6,741 square meters in total to BB, and on August 13, 2010, the Plaintiff transferred O-dong O-dong O-dong O-dong O-dong O-dong O-dong 183-6 square meters in total to BB (hereinafter “the instant land”).

B. On August 31, 2010, the Plaintiff filed an application for reduction of or exemption from capital gains tax on the ground that the instant land constitutes self-farmland for at least eight years when filing a preliminary return on capital gains tax following the transfer of the instant land with the Defendant.

C. However, as a result of the on-site investigation on June 2013, the Defendant confirmed that the Plaintiff cultivated the instant land directly for two years immediately before the transfer date, and determined that the requirements for special deduction for long-term possession were satisfied, but for eight years or more. Accordingly, on September 1, 2013, the Defendant decided and notified the Plaintiff of KRW 000 of the capital gains tax corresponding to the year 2010 (hereinafter “instant disposition”).

D. On November 29, 2013, the Plaintiff filed an appeal seeking the revocation of the instant disposition with the Tax Tribunal. However, the claim was dismissed on April 21, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1 and 2, Eul evidence 1-1 to 4, Eul evidence 2-1 to 6, Eul evidence 3 and 4, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff cultivated the instant land directly for at least eight years, the Defendant ought to reduce or exempt capital gains tax pursuant to Article 69(1) of the Restriction of Special Taxation Act. Nevertheless, the Defendant did not apply the said reduction or exemption provisions, so the instant disposition should be revoked unlawfully.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) According to Article 69(1) of the Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010) and Article 66(13) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22583, Dec. 30, 2010), a person who resides in the seat of farmland shall be directly cultivated for at least eight years in order to be eligible for the reduction or exemption of capital gains tax due to farmland conservation. The term “direct cultivation” here refers to engaging in cultivating crops or growing perennial plants, or cultivating or cultivating 1/2 or more of farming works with his/her own labor. The burden of proof as to the requirements for reduction or exemption refers to a person liable to pay capital gains tax (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002).

2) We examine whether the Plaintiff directly cultivated the instant land for at least eight years.

In light of the following circumstances, Gap evidence Nos. 5, Eul evidence Nos. 5 through 9, and Eul evidence Nos. 12, each of the statements as shown in the plaintiff's argument, it is difficult to believe that each of Gap evidence Nos. 16, Gap evidence Nos. 12 and 13, Gap evidence No. 14-1 through 4, and Gap evidence Nos. 17, are cultivated directly for 8 years or longer after the plaintiff acquired land of this case in 198, and there is no other evidence to prove otherwise.

① From July 20, 200 to July 20, 200, the Plaintiff, as the representative director of CCC Co., Ltd., operated the mechanical manufacturing company at OO-O-O 938-1, from October 7, 2004 to April 30, 2010, the Plaintiff served as a taxi engineer at DDR 224-7, OO-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O as a taxi engineer. At the time of the on-site investigation of the instant land, the Plaintiff conducted the manufacturing business as from November 1, 199, and thereafter worked as a taxi engineer from DD Co., Ltd. to July 18, 2013, the Plaintiff prepared and submitted a confirmation document stating “(seven years) as it was impossible to produce a farmer (seven years) and as a taxi engineer.”

② BB received subsidies for preserving rice income from around 2005 to 2008 with respect to the instant land. In the application for direct payments compensating for rice income, etc. on August 18, 2005, “BB used the instant land for rice farming for ten (10) years,” and the written confirmation on the farmland use and cultivation status attached to the said application state that “EE, the representative of OOOOOO Ri OO village, the instant land location,” stated that “B cultivated the instant land.”

③ Only the Tax-Free Oil Management Book (2003 to 2007) submitted by the Plaintiff as self-proof evidence, cannot be deemed to have possessed agricultural machinery during the pertinent period or used tax-free oil directly for the cultivation of the instant land. Furthermore, even though the total area of the instant land, the land category of which is the field of land reaches 7,730 square meters, the expenses incurred by the Plaintiff for the cultivation of the instant land did not have been verified, and there is no evidence to confirm the income accrued from the instant land, such as the purchase of rice, except for the certificate of sale of cultivated products prepared by the Plaintiff himself/herself.

3) Therefore, the Plaintiff’s above assertion is without merit. Therefore, the instant disposition is lawful.

3. Conclusion

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