early trial 2012west 1018

A person who has income accruing from farming of crops shall not be liable to pay the agricultural income tax, while income tax shall not be imposed.

In the event that one manufactures, processes, and sells its harvested crops as raw materials, the amount of revenue shall be the amount at the market price at the time of harvest. In full view of the authoritative interpretation of the National Tax Service to the same effect, the National Tax Service should evaluate the landscaping trees put into the construction work at the instant place of business on the basis of the market price at the time of input and include them in necessary expenses.

Article 19 of the Income Tax Act

2013Guhap833 global income and revocation of disposition

KoreaA

Head of Mapo Tax Office

December 12, 2013

February 6, 2014

1. The part of the instant lawsuit seeking the revocation of a corrective refusal disposition in excess of the global income tax for the year 2008, global income tax for the year 2009, and global income tax for the year 2010, shall be dismissed.

2. On December 1, 2011, the Defendant’s imposition of the global income tax for the year 2008 imposed on the Plaintiff on the Plaintiff on December 1, 201, the imposition of the global income tax for the year 2008, the imposition of the global income tax for the year 2009, the imposition of the global income tax for the global income tax for the year 2009, the imposition of the global income tax for the exceeding KRW OOOO in excess of the global income for the year 2010, and the imposition of the global income tax for the global income tax for the year 2008, the rejection of each correction of the global income tax for the year 2008, the global income tax for the year 2009, the global income tax for the global income tax for the year 2010, is revoked.

3. The costs of lawsuit shall be borne by the defendant.

Cheong-gu Office

The Defendant’s imposition of global income tax for the year 2008 imposed on the Plaintiff on December 1, 201, in excess of KRW OOOO, in excess of KRW OOOO in the imposition of global income tax for the year 2009, in excess of KRW 2010, in the imposition of global income tax for the year 2010, and in excess of KRW OOOO in the imposition of global income tax for the year 2008, and in January 4, 2012, the Plaintiff’s refusal to correct each of the disposition for the correction of KRW OO of global income tax for the year 2008, KRW OO of global income tax for the year 2009, and KRW OO of global income tax for the year 2010 is revoked.

1. Details of the disposition;

A. From 1964 to 200, the Plaintiff: (a) operated a farm at 1-12 land and 438 land, etc. of O-dong 438; (b) planted and cultivated trees for landscaping; (c) on September 1, 1980, the Plaintiff opened the place of business (hereinafter “instant place of business”) with the trade name of O-dong 205-8 around BB 200, and operated the landscaping construction business under the name of O-2; (b) included the cost-related expenses for landscaping in the sales of O-200 to 10 to 20 to 20 to 20 to 20 to 10 to 20 to 20 to 20 to 20 to 20 to 10 to 20 to 20 to 20 to 20 to 20 to 20 to 20 to 20 to 20 to 20 to 20 to 1 to 2010 to 20 to O.

D. Accordingly, on December 1, 201, the Defendant imposed global income tax on the Plaintiff in the name of 208, O200, O209, global income tax on global income tax for 2010 (hereinafter referred to as O2's initial imposition disposition"), and the Defendant rejected the instant disposition of 208, global income tax on global income for 209, and global income tax on global income for 2009, and the instant disposition of O2's rejection to rectify the amount of tax on global income for 200 years, on the ground that it should be excluded from O2's initial disposition of imposition of 200, O200, O200, 200, O200, 200, 200, 200, 200,000, 20,000,000,000,00).

G. Around October 31, 2012, the Defendant reduced the amount of global income tax for the year 2008, global income tax for the year 2009, global income tax for the year 2009, and global income tax for the year 2010.

[Based on recognition] Gap evidence Nos. 1 through 4 (including branch numbers; hereinafter the same shall apply), Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the part of the instant lawsuit seeking revocation of a corrective refusal disposition in excess of the global income tax for the year 2008, global income tax for the year 2009, and global income tax for the year 2010 is legitimate

In light of the above facts, the Plaintiff filed a claim for rectification with the Defendant for the cancellation of the corrective refusal disposition that exceeds the global income tax assessment for the year 2008, global income tax for the year 2009, global income tax for the year 2009, and global income tax for the year 2010, and the Defendant issued a disposition to refuse the correction of the instant case. As such, the part seeking the cancellation of the corrective refusal disposition that exceeds the global income tax for the year 2008, global income tax for the year 2009, global income tax for the year 209, global income tax for the year 2009, and global income tax for the year 2010 is unlawful as it does not exist.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Regarding the disposition rejecting the correction of the instant case

Even if the Plaintiff engaging in crop cultivating business delivers an invoice using the place of business of this case as a supplier at the request of the purchaser, there is no difference in the substance of income that the crop cultivating business operator obtains by supplying trees to the purchaser, and thus, it should be excluded from income tax.

2) As to the instant disposition

In cases of inserting trees for landscaping into landscaping works, necessary expenses for trees shall be calculated on the basis of the market price at the time of harvest of trees.

B. Relevant statutes

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

C. Determination

1) Disposition rejecting the correction of the instant case

According to Articles 197 and 198 of the former Local Tax Act (amended by Act No. 10221, Mar. 31, 2010; hereinafter the same), a person who has income from farming (agricultural income) among agriculture under the Korean Standard Industrial Classification Table prepared and publicly announced by the Commissioner of the Statistics Korea shall be liable to pay the agricultural income tax to the Si/Gun having jurisdiction over the place where the crops are cultivated. Meanwhile, Article 214 of the same Act provides that no income tax shall be imposed on the income subject to agricultural income tax. Thus, in cases where an agricultural income is derived from the direct sale of fruit trees, ornamental trees, etc. in farmland, only local tax (agricultural income tax) may be imposed, and no income tax shall be imposed.

In full view of the purport of the arguments in Gap evidence Nos. 5 and 6, the plaintiff is acknowledged to have supplied O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O.

Therefore, the defendant's rejection of correction of this case is unlawful, where the plaintiff's income derived from the supply of landscape trees, etc. cultivated directly in the farm of this case constitutes income generated from wholesale and retail business under Article 19 (1) 7 of the Income Tax Act.

2) Disposition of this case

As seen earlier, since the instant amount No. 1 should be excluded from income tax, the instant disposition on the premise that the instant amount No. 1 constitutes subject to income tax is unlawful without having to further examine the Plaintiff’s assertion on this part.

On the other hand, the Plaintiff’s argument regarding necessary expenses provides that the purchase price of the raw materials shall be deemed necessary expenses. In the event that the raw materials produced by the person who runs the landscape construction business are used for his own business, the price of the raw materials when the materials are purchased outside the place of his own business shall be deemed the purchase price of the raw materials. Article 152(1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 21975, Jan. 1, 2010) provides that the amount of revenue shall be the amount calculated at the market price at the time of harvest when the raw materials are manufactured, processed, and sold as the raw materials of agricultural income. (3) In the same purport, the National Tax Service also interpreted that the transaction price at the time of the landscape construction business should be calculated in proportion to the market price at the time of harvest (in the case of an input of ornamental trees produced by the person who is charged with agricultural income tax to the landscape construction business as the raw materials of this case, the Defendant, regardless of the market price at the time of this case’s input.

3. Conclusion

Among the instant lawsuits, the part that seeks revocation of a corrective refusal disposition exceeding the global income tax for the year 2008, the global income tax for the year 2009, and the global income tax for the year 2010 is unlawful. Thus, the Plaintiff’s claim excluding this is justified.