In the event that farmland is substituted for farmland due to the necessity of cultivation, it shall meet the requirements of self-defense and residence.

In order to meet the requirements for reduction of and exemption from farmland, the direct cultivation and re-fishing villages are met, but the fact of direct cultivation cannot be known, and the scope of the location of the farmland is claimed to be connected to the sea, but it is not included in the sea as it is based on the Si/Gun/Gu, so it does not meet the requirements for re-fishing in

Article 70 of the Restriction of Special Taxation Act

2015Guhap1056 Revocation of Disposition of Imposing capital gains tax

NewA

BB Director of the Tax Office

on October 10, 2016

on October 24, 2016

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 54,803,330 against the Plaintiff on July 21, 2014 is revoked.

1. Details of the disposition;

A. On March 21, 2013, the Plaintiff sold the 410-4 m2,531 m2 (hereinafter referred to as “the previous farmland”) to E, etc. at the time ofCC as owned by CC, and purchased the 661m2, Doz. (hereinafter referred to as “the acquired farmland of this case”) from E, etc. on April 4, 2013, DDR 512-2, 461 m2, 461 m2, 4, 2013.

B. On April 18, 2013, the Plaintiff reported the transfer income tax on the previous farmland of this case, and asserted that the previous farmland of this case constitutes the reduction or exemption of transfer income tax on the farmland of this case under Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 12251, Jan. 14, 2014; hereinafter the same) and applied for full exemption of KRW 48,182,992 of transfer income tax.

C. As a result of the investigation into the Plaintiff’s content of the capital gains tax, the Defendant confirmed that the Plaintiff did not reside at the seat of the acquisition farmland in this case, and resided in the CC-dong 301-28 2108 dong-dong 301 2108 (hereinafter “CC-dong apartment”), for the said reason, denied the reduction or exemption of capital gains tax on farmland substitute land under Article 70 of the former Restriction of Special Taxation Act, and on July 21, 2014, notified the Plaintiff of the correction and notification of capital gains tax of KRW 54,803,30 (including additional tax of KRW 6,620,343) reverted to the Plaintiff in 2013.

D. The Plaintiff appealed and filed a tax appeal on February 9, 2015 after filing an objection on October 10, 2014, but the Tax Tribunal dismissed the decision on May 15, 2015.

[Reasons for Recognition] The facts without dispute, Gap evidence Nos. 1 through 3, 8, Eul evidence Nos. 1, 2, and 4 (including the number of pages; hereinafter the same shall apply), the purport of the whole pleadings

2. The legality of disposition.

A. The plaintiff's assertion

The Plaintiff is a farmer who engages in the business of cultivating farmland and orchard without any other occupation. The Plaintiff registered the domicile at the seat of the acquisition farmland in this case, entered the apartment complex and the domicile in the resident registration, and cultivated in the acquisition farmland in this case. As such, the Plaintiff’s residence in the seat of the acquisition farmland in this case is located, and the C-gu, which has the apartment complex inCC, is adjacent to Ulsan-gun and the sea where the acquisition farmland in this case is located. Since Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26070, Feb. 3, 2015) amended after the instant disposition (amended by Presidential Decree No. 26070, Feb. 3, 2015) increases the straight distance between the acquired farmland and the place of residence within 30km, it is excessive to restrict the straight distance between the acquired farmland and the place of residence within the limit of 20km, and thus, the disposition by the Defendant, which is the reduction of capital gains tax, is unlawful.

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

(c) Fact of recognition;

1) The Plaintiff’s resident registration change details around the time of acquiring the farmland of this case are as follows.

2) In around 1988, the Plaintiff resided in the CCC-dong 301-28CC2 apartment complex 12 Dong 408 (hereinafter “CC-dong apartment prior to redevelopment”), and the Plaintiff’s family members continued to reside in the above apartment even after the Plaintiff moved in the above apartment, and thereafter, the Plaintiff was redevelopment of the above apartment and became entitled to acquire theCC-dong apartment. The Plaintiff completed the registration of ownership preservation on its own name on June 14, 2004, and completed the registration of ownership transfer on July 4, 2013 to the GG, the Plaintiff’s wife, on its own name, on the ground of donation from July 3, 2013.

3) In the case of a detached house, which was reported by the Plaintiff on April 10, 2013, in the case of a single house located in Csan-ACC-Eup 888, the Plaintiff did not actually reside in the said detached house.

4) The land that the Plaintiff reported to move-in on May 26, 2014 is only a temporary container installed in the site, and there is no residential building, and neighboring residents sell fruits, vegetables, etc. from the said land.

5) The acquired farmland in the instant case andCC Dong apartment are located far from 30km in a straight line, and the instant acquired farmland in the instant case andCC Dong apartment are located in Ulsan-gu, Northern-gu, and China-dong, and there is no connection with the land boundary line.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 4, Eul evidence Nos. 3 through 5, the purport of the whole pleadings

D. Determination

1) Article 70(1) of the former Restriction of Special Taxation Act provides that a tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted on income accruing from substitute land for farmland prescribed by Presidential Decree as necessary for the cultivation of land directly cultivated by a resident prescribed by Presidential Decree who resides in the seat of farmland.

Article 67 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 25211, Feb. 21, 2014; hereinafter the same shall apply) provides that "resident prescribed by Presidential Decree" in Article 70 (1) of the Act means a person who has resided in an area falling under any of subparagraph 1 within a Si/Gun/Gu where farmland is located for three years or longer, an area adjacent to an area under subparagraph 1 ( subparagraph 2) or an area ( subparagraph 3) within 20 km in a straight line from the farmland in question, who is a resident under subparagraph 1 of Article 1-2 (1) of the Income Tax Act as of the date of the transfer of farmland before the large land transfer (the main sentence of Article 70 (1) of the Act provides that "a person who has directly cultivated farmland in such a manner as prescribed by Presidential Decree" means a person who has continuously resided in the farmland in his/her own farmland or the cultivation of perennial plants and has continuously acquired at least half of the value of farmland in accordance with the previous Act for two years or transfer of farmland.

2) The burden of proof of non-taxation or exemption of capital gains tax as above is against a taxpayer (see, e.g., Supreme Court Decision 94Nu12708, Apr. 26, 1996).

However, in full view of the aforementioned facts and the purport of the entire arguments, the Plaintiff did not meet the requirements for reduction or exemption of farmland on behalf of the Plaintiff under Article 70(1) of the former Restriction of Special Taxation Act and Article 67 of the former Enforcement Decree of the Restriction of Special Taxation Act, and the evidence alone submitted by the Plaintiff is insufficient to recognize the fact that the Plaintiff resided at the seat of the farmland acquired in the instant case, and there is no other evidence to acknowledge

A) The Plaintiff’s family members resided in the apartment before redevelopment and continued to reside in theCCdong apartment after the redevelopment. The Plaintiff, from around 1988 to six times, filed a move-in report on the instant apartment and theCCdong apartment from around 198 to six times, and had this case’s previous farmland or acquired farmland. In addition, the Plaintiff appears to have not resided in the instant apartment and the instant farmland located in the land located in PCC-gun Seoul Special Metropolitan City 888, which completed the move-in report after the acquisition date of the acquired farmland. Accordingly, the Plaintiff appears to have resided in the instant acquired farmland at least after the acquisition date of the acquired farmland, and even if the Plaintiff had cultivated directly on the acquired farmland, it cannot be deemed that the Plaintiff had the domicile at the location of the Plaintiff.

B)CC-dong apartment is located more than 20 km in a straight line from the acquisition farmland of this case. Between the Csan-gun and the Csan-dong apartment located in which the acquired farmland of this case is located and the Csan-dong apartment is located, it cannot be deemed as a Si/Gun/Gu area adjacent to the location of the acquired farmland of this case.

Although the Plaintiff asserts that CsanCC group and C.R. are adjacent to the sea, the scope of the location of the farmland is limited to the Si/Gun/Gu, and if the scope of the location of the farmland includes the sea, the scope of the connected area is almost limited, so the intent of the law that only the person who directly cultivates while residing in the location of the farmland or its neighboring area can be dismissed. Thus, it cannot be interpreted as the Plaintiff’s assertion.

C) In addition, even if the amended Enforcement Decree of the Restriction of Special Taxation after the disposition of this case enables residents to reside within 20km from the place of farmland, etc. to reside within 30km, the disposition of this case, which was made in accordance with the relevant laws and regulations in force at the time of the sale of the previous farmland of this case and the purchase of the farmland of this case, cannot be deemed unlawful.

3. Conclusion

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