Early High Court Decision 201J 0864 (Law No. 13, 2011)

It is difficult to see that substitute farmland was directly cultivated, and a disposition to exclude reduction or exemption is legitimate.

In light of the fact that it is difficult to find a special reason for raising farming houses in substitute farmland in light of the size of sales, net income, etc. of the company operating, and that it is difficult to recognize that it directly cultivated substitute farmland in light of the fact that it is difficult to find out a special reason for raising farming houses in substitute farmland, and that it is only an indirect operation of agriculture with a view to other occupation.

Article 70 of the Restriction of Special Taxation Act

2011Gudan2574 Revocation of Disposition of Imposing capital gains tax

Maximum XX

Head of the Pakistan Tax Office

July 2, 2012

August 6, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 000 for the year 2009 against the Plaintiff on December 2, 2010 is revoked.

1. Details of the disposition;

A. On February 27, 2009, the Plaintiff transferred 1910m2 (hereinafter referred to as “transfered farmland of this case”) to Sori-si, Sori-si, Sori-si, Puju, 000-5, and on March 30, 2009, acquired the land of 1213m2 (hereinafter referred to as “the substitute farmland of this case”) prior to 00m2 (hereinafter referred to as “the substitute farmland of this case”).

B. On April 6, 2009, the Plaintiff filed a preliminary return on the tax base of capital gains tax by applying Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 10361, Jun. 8, 2010) to the Defendant on capital gains from the transfer of the farmland of this case, on the grounds that the Plaintiff acquired and directly cultivated the farmland of this case.

C. The Defendant denied the Plaintiff’s application for reduction or exemption of capital gains tax on the ground that the Plaintiff did not own the farmland of the instant substitute farmland as a result of the on-site verification conducted by the Defendant, and on December 2, 2010, corrected and notified the Plaintiff of KRW 000 of capital gains tax for the year 2009 (hereinafter “instant disposition”).

D. On February 28, 201, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on February 28, 201, but the Tax Tribunal dismissed the said appeal on July 13, 2011.

[Ground of recognition] Facts without dispute, entry of Gap evidence 1 to 3, purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

After purchasing the land of this case, the Plaintiff had been engaged in the farming house of Do in the farmland of this case. The Plaintiff’s self-coveration is proved by the residents’ access control line (hereinafter referred to as “public access line”), the dry field receipt, the seed of Do, and the fertilizer purchase receipt, and thus, the disposition of this case on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) According to Article 70(1) of the former Restriction of Special Taxation Act and Article 67(1), (2), and (3)1 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22516, Dec. 7, 2010), where a person who resided in the former location of farmland for not less than three years and has cultivated while residing in the new location of farmland for not less than three years, within one year, and the area of newly acquired farmland is not less than 1/2 of the area of farmland or 1/3 of the value of transferred farmland, the amount of tax equivalent to 100/100 of the capital gains tax on capital gains accruing from the newly acquired farmland shall be reduced or exempted. The purport of the provisions of the Restriction of Special Taxation Act lies in protecting and encouraging cultivation by guaranteeing free substitution of farmland, and thus, it shall be interpreted that the area of farmland to be newly acquired by the farmer shall be for three or more years, and thus, it shall be interpreted that the area of farmland to be newly acquired and transferred within one year or more.

(2) First of all, in light of the following circumstances, as to whether the Plaintiff cultivated the farmland of this case directly, each of the entries in the Health Center, Gap evidence Nos. 3 through 6, 12, 13, 25, and 26 (including paper numbers) as to whether the Plaintiff directly cultivated the farmland of this case, each of the entries in the evidence Nos. 10, 15, witness A, and tearB, as shown in the Plaintiff’s assertion, is difficult to believe, and each of the statements in the evidence Nos. 7 through 9, 11, 14, and 17 (including paper numbers) submitted by the Plaintiff is insufficient to recognize that the Plaintiff directly cultivated the farmland of this case (including paper numbers), and it is difficult to view that there is no evidence to support the Plaintiff’s direct cultivation of the farmland of this case without any specific intention, such as the method of cultivation, the content of the work, frequency of the work, etc., and the Plaintiff’s own cultivation.

① From August 20, 1998, the Plaintiff engaged in the wholesale and retail business of construction materials with the trade name of “YY”. The sales volume of the Y has continuously increased to KRW 000 in the year 2008, KRW 000 in the year 2009, KRW 000 in the year 2010, and KRW 000 in the year 201. The net profit also increased to KRW 000 in the year 2008, KRW 000 in the year 2009, KRW 000 in the year 2010, and KRW 000 in the year 201.

② The Plaintiff, while operating the said enterprise, employed JCC as an employee or a driver around June 2009 due to lack of human resources.

③ The Plaintiff asserts that her children had led to the operation of the above Y from around 2007, but it is difficult for the Plaintiff to believe the above assertion in light of the Plaintiff’s circumstances where her children were merely 20 latter parts, and Y’s sales and net profit.

④ In light of the above company’s sales amount and net profit amount, etc., it is difficult for the Plaintiff to find out any special reasons to prevent the Plaintiff from farming in the substitute farmland of this case.

⑤ In addition to the land of this case, the Plaintiff owns farmland of 1,463 square meters in the Gun of Pakistan, 000 square meters in the Gun of Pakistan, and 000 square meters in each Ri, such as 000 square meters in each Gun of Pakistan, and 000-61 square meters in each Gun of Pakistan-si, and 375 square meters in each Gun of Pakistan-si. As such, the Plaintiff’s assertion that the land of this case is 1236 square meters in each Gun of Pakistan-si and 1463 square meters in each Gun of Pakistan-si is entrusted to the Corporation of Agricultural and Fishing Villages-si.

(6) If it is merely an indirect management of agriculture with a focus on other occupation, it is difficult to regard it as an "self-competitive competition" under Article 70 (1) of the Restriction of Special Taxation Act.

7) Although the fact that the Plaintiff entered the private-owned land without personal information is recognized, it is not recognized that the Plaintiff directly cultivated the land of this case due to such circumstance.

① The Plaintiff acquired the farmland of this case on March 30, 2009, and the Plaintiff’s receipt for purchase of Dorachi seeds submitted by the Plaintiff stated that the Plaintiff purchased Dorachi seeds on March 8, 2009, before acquiring the farmland of this case.

3. Conclusion

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