Cho High 2016Gu1955 (Law No. 14, 2016)

Fictitious temporary cultivation for exemption from capital gains tax is not subject to reduction or exemption from capital gains tax.

It is difficult to view that the instant land was temporarily in a state of temporary suspension, and even if the crops were in serious condition at the time of transfer, the disposition that excluded the Plaintiff from reduction or exemption because it was deemed that the temporary cultivation was disguised for exemption from capital gains tax at the time of transfer cannot be deemed farmland

Reduction or exemption of transfer income tax for self-farmland 69 of the Restriction of Special Taxation Act

Article 66 of the Enforcement Decree of the Restriction of Special Taxation

2016Guhap22812 and revocation of disposition of transfer income tax

○ ○

○ Head of tax office

December 20, 2016

January 24, 2017

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 85,445,760 and additional tax of KRW 11,714,610 on February 2, 2016 against the Plaintiff on February 2, 2016 is revoked.

1. Details of the disposition;

A. On April 12, 1988, the Plaintiff acquired 1,468 square meters (hereinafter “instant land”) prior to ○○○○-dong, ○○○-○○○, and completed the registration of ownership transfer for the instant land to Kim○○ on July 18, 2014, on the ground of sale on June 13, 2014.

B. The Plaintiff filed an application for reduction or exemption of capital gains tax under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter “Special Taxation Restriction Act”) with the Defendant on the ground that the Plaintiff’s transfer of the instant land was self-owned farmland for at least eight years, and filed a return on the tax amount to be voluntarily paid as zero won.

C. As a result of a regular audit conducted against the Defendant, the director of ○○○ Regional Tax Office pointed out and notified that the Plaintiff should be exempted from the application of capital gains tax reduction or exemption under Article 69 of the Restriction of Special Taxation Act on the transfer of the instant land as the Plaintiff did not cultivate the instant land directly. Accordingly, the Defendant denied capital gains tax reduction or exemption, and on February 11, 2016, issued a correction and notification of capital gains tax amounting to KRW 97,160,370 (including additional tax amounting to KRW 11,714,614) for the Plaintiff (hereinafter “instant disposition”).

D. Accordingly, the Plaintiff filed an appeal with the Tax Tribunal on April 26, 2016, but the Tax Tribunal dismissed the Plaintiff’s claim on July 14, 2016.

Facts that there is no dispute for recognition, Gap Nos. 1, 2, 14, and Eul No. 1

(hereinafter the same shall apply), the purport of the whole pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the Plaintiff directly cultivated the instant land for not less than eight years and met the requirements for reduction and exemption of capital gains tax. Nevertheless, the instant disposition imposing capital gains tax on the Plaintiff is unlawful.

1) The Plaintiff directly cultivated the instant land for about 26 years after April 11, 198, which was at the time of initial purchase, from July 18, 2014, which was at the time of sale. However, the Defendant confirmed that the instant land is used as a construction materials-related business establishment in the airlinejin in 2008, and that the instant land was used as a business place from May 20, 193 to May 26, 2014, the Plaintiff did not recognize direct cultivation.

2) The Plaintiff directly cultivated the instant land for five years from April 198 to May 1993, and for two years from September 23, 2005 to October 23, 2006 (one year and one month for practical use) and for one year (one half month for practical use) as of October 23, 2006.

3) Since the early 1980s, prior to the purchase of the instant land, the Plaintiff directly cultivated the instant land for at least eight (8) years since it acquired the instant land in the name of Yong-si, Yong-Nam, and thus, the Plaintiff directly cultivated the instant land.

4) Even if the instant land was used as a place where construction materials are loaded, it is merely a temporary state of absence because it can be used at any time as farmland, and thus, it constitutes the transfer of farmland.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Article 69(1) of the Restriction of Special Taxation Act provides that the tax amount equivalent to 100/100 of capital gains tax shall be reduced on the income accrued from the transfer of land prescribed by Presidential Decree among land directly cultivated by a resident prescribed by Presidential Decree who resides in the seat of farmland for at least eight years, and the burden of proof as to the requirements for such reduction or exemption lies in the Plaintiff who is a person liable to pay capital gains tax exemption (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002).

2) In light of the above legal principles, comprehensively taking account of the following circumstances, which can be acknowledged by comprehensively taking account of the purport of the entire pleadings as to this case’s health team, the aforementioned evidence, and evidence Nos. 17, and Nos. 2 through 4, the evidence submitted by the Plaintiff alone is insufficient to recognize that the land of this case was directly cultivated for not less than eight years, or that the land of this case was farmland at the time of the transfer, and there is no other evidence to acknowledge it. Accordingly, the disposition of this case is lawful

① From May 20, 1993 to September 22, 2006, the instant land was respectively registered as the location of the “○○○○○○○○ Industry” at the place of business, from October 24, 2006 to May 26, 2014, which was operated by ○○○○○○○○○○○. In light of the fact that, unlike other adjacent land in 2008, 201, and 201 and 2014, it appears that the Plaintiff owned the instant land for the entire period of 1996, 190, 200, 208, 201, and 201, and 2014, less than the total period of 4.18 months from the place of business registered as the place of business from 204 to the place of business, and the Plaintiff appears to have used the instant land for the entire period of 4.18 months from the place of business.

② The Plaintiff asserts that ○○○ directly cultivated the instant land from December 1, 2013, the day on which the Plaintiff leased another place of business to July 18, 2014, which is the day of the transfer of the instant land. However, considering the airline margin and satellite photographs of the instant land as seen earlier, unlike other land adjacent to 2014, the Plaintiff did not find a trace of growing crops, such as dry field, high field, etc., unlike those of other land adjacent to 2014.

③ The Plaintiff asserted that, from the beginning of the early 1980s, the instant land was directly cultivated by the Plaintiff from the time on which the title trust was held in title, the Plaintiff directly cultivated the instant land on April 12, 1988, which was the date of acquisition of the instant land. However, there is no objective evidence, such as the data purchased from the agricultural organization and the agricultural materials or the sales performance of the crops cultivated by the Plaintiff.

④ In light of the fact that the period from May 20, 1993 to September 22, 2006 and around 20 years and 11 months from October 24, 2006 to May 26, 2014, the Plaintiff’s lease the instant land to ○○○○ for the purpose of loading construction materials is difficult to deem that the instant land was temporarily in a state of temporary suspension. Even if the instant land was in existence at the time of the transfer of the instant land, considering the above circumstances, it is difficult to deem that the Plaintiff was in a state of temporary suspension. In light of the above circumstances, even if the instant land was in existence at the time of the transfer of the said land, it is deemed that the Plaintiff was the most temporary cultivation for the purpose of

⑤ Examining the officially assessed individual land price of the instant land, as asserted by the Plaintiff, it is not deemed that there was a change in the officially assessed land price according to changes in the land use situation before and after each of the time when the Plaintiff reflected the situation in which the Plaintiff leased the instant land to ○○○ for the use of construction materials in loading the instant land ( January 1, 1994) and the time when the Plaintiff returned the instant land from Chuncheon and reflected the re-arable situation ( January 2, 20

④ The confirmation document and the confirmation document jointly prepared by the ○○○ and other ○○○○, a farmer nearby the instant land, are merely a third party’s confirmation document to confirm the Plaintiff’s cultivation fact abstractly, and thus, it is difficult to believe the content of the document, unless the specific evidence related to the period actually cultivated by the Plaintiff is supported.

7) The sales statement, including agricultural chemicals and composts, submitted by the Plaintiff, is the time when the instant land was used as a place where construction materials are loaded, and since the documents, such as the registration certificate for persons eligible for direct payments for dry field farming, the farmland ledger, and the association member certificates, can be issued even if crops are not cultivated by using their own labor, each of the above evidence submitted by the Plaintiff cannot be deemed as direct evidence

3. Conclusion

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