National High Court Decision 2007Du3730 ( December 06, 2007)

A disposition that excludes an application for reduction of self-farmland for eight years by deeming that it has been leased without direct self-sufficiency;

In full view of the witness’s testimony to the effect that the instant land, which was a dry field, was cultivated by changing it into a rice field, it is reasonable to deem that the Plaintiff directly cultivated the instant land for eight years.

The contents of the decision shall be the same as attached.

Article 69 (Abatement or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

Article 66 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

1. The Defendant’s disposition of imposition of capital gains tax of KRW 57,802,390 for the Plaintiff on July 1, 2007 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by the entry of Gap evidence 1-1, 2, and 2-1 to 3, Gap evidence 3, 5, 6, Eul evidence 1-1.

A. On June 28, 1996, the Plaintiff acquired 1,319m2 (hereinafter “instant land”) from ○○-dong 346m2 (hereinafter “○○-dong 346m2”) and transferred it to the Korea National Housing Corporation on June 5, 2006.

B. On May 1, 2007, the Plaintiff reported the reduction or exemption of capital gains tax to the Defendant on the ground that the instant land constitutes farmland with a self-major for at least eight years.

C. The Defendant deemed that the Plaintiff did not meet the requirements for reduction and exemption of capital gains tax for self-arable farmland under Article 69 of the Restriction of Special Taxation Act, and decided and notified the Plaintiff of KRW 57,802,390 for capital gains tax belonging to the year 2006 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the National Tax Tribunal on September 20, 2007, but was dismissed on December 6, 2007.

2. Determination of legality of disposition

A. Judgment of the parties

(1) The plaintiff's assertion

The plaintiff directly cultivated the land of this case for not less than 8 years and transferred it to the Korea National Housing Corporation. The disposition of this case on different premise is unlawful.

The instant disposition is lawful, since the instant land was cultivated only by the yellow ○○, which leased the instant land from the Plaintiff, and it was not directly cultivated by the Plaintiff.

(b) Related statutes;

Article 69 (Abatement or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

Article 66 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(c) Fact of recognition;

The following facts are not disputed between the parties, or may be acknowledged by means of the statements or images of Gap evidence 7, 9, 10, 12, 15, Eul evidence 2-1 through 7, Eul evidence 3-1, 2, Eul evidence 4, Eul evidence 12-1, and Eul evidence 12-2:

(1) The details of the change in the Plaintiff’s domicile are as follows.

on May 1, 1995 ○○-dong 792-0

on March 20, 1997 ○○-dong 692-○

on February 3, 2004 ○○-dong 689

(2) Land category of the instant land was filled up on the answer or around 1999.

(3) Around 2005, at the time of investigating the instant land by the Korea National Housing Corporation’s regional headquarters, it was investigated that yellow house leased the instant land from the Plaintiff and hulled rice shed.

(4) On November 2006, the Plaintiff filed an objection with the head of the Korea National Housing Corporation's Gyeonggi-gu headquarters to the effect that the instant land was not leased to ○○.

(5) On February 23, 2007, in part, 2,690,000 won was paid to the Plaintiff from the Korea National Housing Corporation for agricultural loss compensation that the Plaintiff would receive with respect to the instant land.

(6) On March 2007, the Yellow City Corporation leased the instant land from the Plaintiff to the Korea National Housing Corporation and claimed compensation for farming losses.

C. Determination

Therefore, it is reasonable to view that the Plaintiff directly cultivated the instant land for 8 years from 1996 to 2004 in light of the witness’s testimony, each of the statements and evidence Nos. 8, 13-1, 2-2, and each of the above statements and evidence Nos. 8, 3-1, 8-1, 3-1, 4-1, 4-1, 3-1, 4-1, 4-1, 4-1, 4-3 of the above facts are insufficient to find that the Plaintiff directly cultivated the instant land for 8 years from 1996 to 2004 ( contrary to this, each of the statements and evidence No. 10-1, 2-1, 7, 10-1, 2-2, 8-1, 3-4, 3-1, 4-1, 3-4, 4-1, 3-1, 4-1, 3-1, 4-1, and 3-4).

Therefore, since the Plaintiff cannot impose capital gains tax on the transfer of the instant land, the instant disposition is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and it is so decided as per Disposition.