National High Court 2014 Jeon 2609 ( June 30, 2014)

Cancellation of Transfer Income Tax Imposition

It does not constitute "a case of cultivation while residing in a new location of farmland for not less than three years after acquiring other farmland within one year from the date of transfer of previous farmland, which is a requirement for non-taxation of capital gains tax."

2014Guhap1104 Revocation of imposition of capital gains tax

Economic Zone

AA Head of the Tax Office

December 4, 2014

December 4, 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 disposition of imposition of capital gains tax of KRW 47,563,00 against the Plaintiff on April 7, 2014 is revoked.

1. Details of the disposition;

A. On January 29, 2003, the Plaintiff acquired the previous farmland of this case on June 19, 2009 and owned it. On July 2, 2009, the Plaintiff acquired the land of this case on July 2, 2009, Cheongju-gu, Cheongdong-gu, Cheongdong-gu, Cheongdong-gu, Seoul (hereinafter “the substitute farmland of this case”). On August 31, 2009, the Plaintiff reported capital gains from the transfer of the previous farmland of this case to the Defendant as non-taxable income from the substitute farmland of this case.

B. However, on April 7, 2014, the Defendant issued a correction and notification of capital gains tax of KRW 47,563,000 for the Plaintiff on the ground that the Plaintiff did not directly cultivate the instant substitute farmland (hereinafter “instant disposition”).

C. On May 15, 2014, the Plaintiff filed an appeal with the Director of the Tax Tribunal against the instant disposition, but the said claim was dismissed on June 30, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, 9, 22, 23, Eul evidence No. 1 (including branch numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter the same) provides that where a farmer residing in a previous location of farmland acquired another farmland and cultivated it while residing in a new location of farmland for not less than three years within one year from the date of transfer of the previous farmland, the transfer income tax amount shall be reduced or exempted, and the substitute farmland shall not be necessarily commenced within one year from the date of transfer of the previous farmland, unless the Plaintiff acquired another farmland within one year from the date of transfer of the previous farmland, and cultivated it in a new location of farmland for not less than three years at any time after the date of transfer, the transfer income tax shall be reduced or exempted. Even if this does not apply, the Plaintiff continued to the spouse and the mother of the previous farmland, and the Plaintiff was suffering from waste collection, and his spouse was unable to cultivate the farmland inevitably due to the cause that the Plaintiff did not acquire the substitute farmland within one year after the transfer of the farmland in this case, and thus, the Plaintiff was not subject to reduction or exemption of the transfer income tax.

2) It is unlawful that the Defendant imposed an additional tax on the Plaintiff separate from the principal tax.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether capital gains tax has been reduced or exempted

A) Article 70(1) of the former Restriction of Special Taxation Act provides that "the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted for the income accruing from substitute land of farmland falling under the cases prescribed by the Presidential Decree because the resident prescribed by the Presidential Decree residing in the location of such farmland (including non-taxation, reduction and exemption, and small collection) is directly cultivated by such resident, and Article 67(3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22037, Feb. 18, 2010; hereinafter the same shall apply) provides that "the cases prescribed by the Presidential Decree pursuant to Article 70(1) of the same Act mean the cases where the person who cultivated while residing in the previous location of farmland for not less than three years under subparagraph 1 resides in the previous location of farmland for not less than one year (if he is purchased by consultation, expropriated, or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and expropriation pursuant to any other Act, he/she shall be deemed a new farmland for not less than three years:

The purport of the above provision is to protect farmers through permission and guarantee of free substitution of farmland, or to develop and promote agriculture. As such, the acquisition and sale of farmland by self-employed farmer should be limited to the case where the farmland possessed by him/her is to be exchanged for the purpose of cultivation due to the necessity for cultivation (see, e.g., Supreme Court Decision 95Nu3695, Sept. 29, 1995). Therefore, it is reasonable to view that the above provision should be interpreted to have started within one year from the date of transfer of previous farmland, as it requires residence and self-defense in a new location of farmland for at least three years, unless there are special circumstances (see, e.g., Supreme Court Decision 2002Du5924, Sept. 5, 2003).

At this time, the burden of proving the fact of directly cultivating substitute farmland as a requirement for reduction or exemption of capital gains tax is against a taxpayer who asserts reduction or exemption of capital gains tax (see, e.g., Supreme Court Decision 94Nu996, Oct. 21, 1994). The principle of strict interpretation derived from the principle of no taxation without law applies not only to a case that meets the taxation requirement, but also to a case that meets the requirements for non-taxation and tax reduction or exemption. As such, the expanded interpretation or analogical interpretation of the requirements for non-taxation or tax reduction or exemption as favorable to the taxpayer without any justifiable reason constitutes a result contrary to the principle of public taxation, which is the basic ideology of tax law, and thus, it is not allowed (see, e.g., Supreme Court Decision 200

B) In light of the above legal principles, the Plaintiff owned the previous farmland of this case on January 29, 2003 and possessed it on June 19, 2009, and acquired the substitute farmland of this case on July 2, 2009. However, as seen earlier, the Plaintiff is the Plaintiff who did not directly cultivate the substitute farmland of this case for three or more years from the time the Plaintiff acquired the substitute farmland of this case. According to the above facts, the Plaintiff does not constitute “a case where the Plaintiff acquired another farmland within one year from the date of transfer of previous farmland, which is the requirement for non-taxation of capital gains tax under Article 67(3)1 of the Enforcement Decree of the Restriction of Special Taxation Act, and cultivated the substitute farmland of this case while residing in a new location for three or more years.”

Meanwhile, the Plaintiff alleged that the Plaintiff was unable to cultivate the substitute farmland of this case because the Plaintiff continued to care for her spouse and her mother until December 2012 after the transfer of the previous farmland of this case, and the Plaintiff was suffering from waste converging, and the her spouse was forced to die on or after the death of November 2012. However, even according to the Plaintiff’s assertion, the Plaintiff could not be deemed to have sold the previous farmland of this case to raise hospital expenses by preventing the Plaintiff from suffering from waste collection even while the Plaintiff was under the care of the spouse who was suffering from brain flag, high blood pressure, urculsis, etc. from around April 2008 while the spouse was under the care of her mother until the death of her mother. In light of the fact that the Plaintiff’s acquisition and sale of the previous farmland of this case cannot be deemed to be a case where the Plaintiff acquired new farmland of this case and did not cultivate it for more than three years due to the need for cultivation. Therefore, it cannot be deemed to constitute a non-taxation requirement of capital gains tax.

Therefore, the transfer income from the transfer of the previous farmland of this case is not subject to capital gains tax exemption under the former Restriction of Special Taxation Act, and this part of the plaintiff's assertion is without merit

2) Whether the imposition of penalty tax is lawful

Under the tax law, in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, as prescribed by the individual tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer’s intention and negligence are not considered as administrative sanctions. On the other hand, such sanctions cannot be imposed in cases where there are justifiable grounds that make it difficult for the taxpayer not to be aware of his/her duty, such as when there are circumstances that make it difficult for him/her to present or when it is unreasonable for him/her to expect the fulfillment of his/her duty, etc. (see, e.g., Supreme Court Decision 95Nu10181, Nov. 14, 1995); however, the land or mistake of statutes cannot be deemed as falling under such justifiable grounds (see, e.g., Supreme Court Decision 200Du5944, Apr. 12, 200).

With respect to the instant case, there is no evidence to deem that there was a justifiable reason to believe that the Plaintiff did not neglect the Plaintiff’s duty to pay capital gains tax on the previous farmland of this case on the grounds that it is unreasonable for the Plaintiff to not know of his duty to perform his duty to pay capital gains tax on the previous farmland of this case, and that there was a circumstance where it is reasonable to suggest him or there was a circumstance that it is unreasonable to expect the Plaintiff to fulfill his duty to perform, etc.

3. Conclusion

Therefore, the defendant's disposition of this case is legitimate, so the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.

Judges of the presiding judge only;

Relevant statutes

��구 조세특례제한법(2010. 1. 1. 법률 제9921호로 개정되기 전의 것) 제70조(농지대토에 대한 양도소득세 감면)

��농지소재지에 거주하는 대통령령이 정하는 거주자가 직접 경작한 토지로서 농업소득세의 과세대상(비과세��감면과 소액부징수를 포함한다)이 되는 토지를 경작상의 필요에 의하여 대통령령이 정하는 경우에 해당하는 농지의 대토로 인하여 발생하는 소득에대하여는 양도소득세의 100분의 100에 상당하는 세액을 감면한다.

��제1항의 규정에 의하여 양도하거나 취득하는 토지가 ��국토의 계획 및 이용에 관한 법률��에 의한 주거지역 등에 편입되거나 ��도시개발법��그 밖의 법률에 의하여 환지처분 전에 농지 외의 토지로 환지예정지 지정을 받은 토지로서 대통령령이 정하는 토지의 경우에는 제1항의 규정을 적용하지 아니한다.

��제1항의 규정에 의하여 감면을 받고자 하는 자는 대통령령이 정하는 바에 따라 감면신청을 하여야 한다.

��구 ᕂ조세특례제한법 시행령(2010. 2. 18. 대통령령 제22037호로 개정되기 전의 것)제67조(농지대토에 대한 양도소득세 감면요건 등)

��법 제70조 제1항에서 대통령령이 정하는 거주자 라 함은 3년 이상 다음 각 호의 어느 하나에 해당하는 지역(경작을 개시할 당시에는 당해 지역에 해당하였으나 행정구역의 개편 등으로 이에 해당하지 아니하게 된 지역을 포함한다. 이하 이 조에서 농지소재지 라 한다)에 거주한 자를 말한다.

1. 농지가 소재하는 시��군��구(자치구인 구를 말한다. 이하 이 항에서 같다) 안의 지역

2. 제1호의 지역과 연접한 시��군��구 안의 지역

3. An area within 20 kilometers in a straight line from the farmland concerned.

��법 제70조 제1항에서 직접 경작 이라 함은 거주자가 그 소유농지에서 농작물의 경작 또는 다년성 식물의 재배에 상시 종사하거나 농작업의 2분의 1이상을 자기의 노동력에 의하여 경작 또는 재배하는 것을 말한다.

��법 제70조 제1항에서 대통령령이 정하는 경우 라 함은 경작상의 필요에 의하여 대토하는 농지로서 다음 각 호의 어느 하나에 해당하는 경우를 말한다.

1. Where a person who has cultivated while residing in a location of previous farmland for not less than three years and acquired another farmland within one year (two years in cases of expropriation by consultation or expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects or by expropriation under other Acts) from the date of transfer of previous farmland, and has cultivated it while residing in a location of new farmland for not less than three years, and falls under any of

(a) Newly acquired farmland whose area is not less than one half of the area of farmland to be transferred; and

(b) Newly acquired farmland whose value is not less than one third of the value of farmland to be transferred.

2. Where a person who has cultivated while residing in a location of previous farmland for not less than three years and transferred the previous farmland within one year from the date of acquisition of new farmland, and has cultivated the newly acquired farmland while residing in a location of new farmland for not less than three years, and falls under any of the following items:

(a) Newly acquired farmland whose area is not less than one half of the area of farmland to be transferred; and

(b) Newly acquired farmland whose value is not less than one third of the value of farmland to be transferred.

��제3항 제1호 및 제2호의 규정을 적용함에 있어서 새로운 농지를 취득한 후 3년 이내에 공익사업을 위한 토지 등의 취득 및 보상에 관한 법률에 따른 협의매수수용

In cases of expropriation pursuant to other Acts, it shall be deemed cultivated while residing in the location of the farmland for at least three years.

��제3항 제1호 및 제2호의 규정을 적용함에 있어서 새로운 농지를 취득한 후 3년 이내에 농지 소유자가 사망한 경우로서 상속인이 농지소재지에 거주하면서 계속 경작한때에는 피상속인의 경작기간과 상속인의 경작기간을 통산한다.

��법 제70조 제2항에서 대통령령이 정하는 토지 라 함은 다음 각 호의 어느 하나에 해당하는 농지를 말한다.

1. 양도일 현재 특별시��광역시(광역시에 있는 군을 제외한다) 또는 시(��지방자치법��제3조 제4항의 규정에 따른 도농복합형태의 시의 읍��면지역을 제외한다) 지역에 있는농지 중 ��국토의 계획 및 이용에 관한 법률��에 따른 주거지역��상업지역 또는 공업지역 안의 농지로서 이들 지역에 편입된 날부터 3년이 지난 농지. 다만, 다음 각 목의어느 하나에 해당하는 경우는 제외한다.

가. 사업시행지역 안의 토지소유자가 1천명 이상이거나 사업시행면적이 기획재정부령으로 정하는 규모 이상인 개발사업지역(사업인정고시일이 동일한 하나의 사업시행지역을 말한다) 안에서 개발사업의 시행으로 인하여 ��국토의 계획 및 이용에 관한 법률에 따른 주거지역��상업지역 또는 공업지역에 편입된 농지로서 사업시행자의 단계적 사업시행 또는 보상지연으로 이들 지역에 편입된 날부터 3년이 지난 경우나. 사업시행자가 국가, 지방자치단체, 그 밖에 기획재정부령으로 정하는 공공기관인개발사업지역 안에서 개발사업의 시행으로 인하여 ��국토의 계획 및 이용에 관한 법률��에 따른 주거지역��상업지역 또는 공업지역에 편입된 농지로서 기획재정부령으로 정하는 부득이한 사유에 해당하는 경우

2. 당해 농지에 대하여 환지처분 이전에 농지 외의 토지로 환지예정지의 지정이 있는경우로서 그 환지예정지 지정일부터 3년이 지난 농지��법 제70조 제3항의 규정에 따라 양도소득세의 감면신청을 하고자 하는 자는 당해 농지를 양도한 날이 속하는 과세연도의 과세표준신고(예정신고를 포함한다)와 함께 기획재정부령이 정하는 세액감면신청서를 납세지 관할세무서장에게 제출하여야 한다.