Cho High Court Decision 2013 Deputy 4769 ( October 13, 2014)

Whether the Plaintiff directly cultivated the transferred farmland and substitute farmland of this case

‘The cultivation or cultivation of 1/2 or more of the farming work with its own labor' must be strictly interpreted in accordance with the logical sense, and the burden of proof for ‘direct cultivation' is against the person liable to pay for the reduction or exemption of the capital gains tax.

Article 70 of the Restriction of Special Taxation Act (Abatement or Exemption of Transfer Income Tax on Substitute Land for Farmland)

2014Guhap920 Revocation of Disposition of Imposing capital gains tax

IsaA

BB Director of the Tax Office

September 16, 2014

October 24, 2014

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the Plaintiff

Cheong-gu Office

The imposition of capital gains tax of KRW 00,000,000 on the Plaintiff on September 2, 2013 by the Defendant shall be revoked.

1. Details of the disposition;

A. On April 12, 2005, the Plaintiff completed the registration of ownership transfer with respect to 00 square meters prior to 344 ○○○○○-gu, ○○○○-do, ○○○○-do, 344, and 345-2 square meters of the same Ri and 345-3 square meters of the same Ri and 345-3 square meters of the same Ri 2,144 square meters.

In addition, on March 13, 2007, the Plaintiff completed the registration of transfer of ownership with respect to ○○○○○○-ri, ○○○○○-ri, 344-4, and 195 square meters prior to ○○-si, ○○-si, ○○-si (hereinafter collectively referred to as the “transfered farmland”).

B. On February 20, 2012, the Plaintiff entered into a sales contract with thisCC and the instant transferred farmland for KRW 000,000,000, and on April 10, 2012, the Plaintiff completed the registration of ownership transfer on the transferred farmland to thisCC.

C. On June 30, 2012, the Plaintiff filed a preliminary return on capital gains tax with respect to the transfer of the farmland of this case as KRW 000,000,000, acquisition value of KRW 00,000,000 with respect to the transfer of the farmland of this case, and filed an application for reduction or exemption of capital gains tax for substitute farmland under Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 12173, Jan. 1, 2014; hereinafter “Special Taxation Act”).

D. On March 29, 2013, 2013, the Plaintiff completed the registration of transfer of ownership with respect to 1,462.6 square meters in △△-ri 1039-1, 1039-2, 1039-2, 1,960 square meters in total, of the two parcels of land (hereinafter referred to as “the substitute land in this case”).

E. However, on the basis of the results of on-site verification conducted from June 26, 2013 to July 5, 2013, the Defendant: (a) neglected to cultivate the instant transferred farmland at the time of transfer; (b) denied the reduction or exemption of capital gains tax pursuant to farmland substitute land on the ground that the Plaintiff did not directly cultivate the instant transferred farmland and the instant substitute farmland; and (c) issued a disposition imposing capital gains tax of KRW 00,000,000 (including additional tax of KRW 0,000,000) on the Plaintiff on September 2, 2013 (hereinafter “instant disposition”).

F. On November 15, 2013, the Plaintiff filed an appeal seeking the revocation of the instant disposition with the Tax Tribunal, but the appeal was dismissed on March 13, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 6, 7, Eul evidence 1, 2, 3, 7, Eul evidence 8-1, 2, and 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

After acquiring the transfer farmland of this case, the Plaintiff directly cultivated the farmland of this case by cultivating and planting crops and fruit trees for more than three years prior to the transfer date. The Plaintiff acquired the farmland of this case and directly cultivated the farmland of this case through the Transboundary Agriculture Act after acquiring the farmland of this case. Therefore, the Plaintiff falls under the requirements for reduction of capital gains tax pursuant to the farmland of this case, and thus, the disposition of this case on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

Article 70 (1) of the Restriction of Special Taxation Act and Article 67 (1), (2), and (3) 1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 24368, Feb. 15, 2013; hereinafter referred to as the "Enforcement Decree of the Restriction of Special Taxation Act") stipulate the requirements for reduction of capital gains tax for farmland substitute land.

The purport of the provision of non-taxation of capital gains tax on the substitute land of farmland is to protect farmers through free substitution and guarantee of farmland, or to develop and encourage agriculture. Therefore, the acquisition and sale of farmland by self-employed farmers should be limited to the case where the farmland owned by the self-employed farmer is intended to substitute land for the purpose of cultivation (see, e.g., Supreme Court Decision 2002Du5924, Sept. 5, 2003).

Therefore, the previous land and new acquired land shall be farmland, and the transferor shall be a person who directly cultivates the previous land and shall be a person who directly cultivates the land at the time of the transfer of the previous land, and a new land shall be acquired for the purpose of direct cultivation. In the case of an speculative farmland transaction, such as the sale and transfer of farmland owned by a self-employed farmer, not merely by sale and transfer for the purpose of large-scale cultivation, but by the temporary acquisition of marginal profits from the short-term transfer, it shall not be subject to a non-taxation (see, e.g., Supreme Court Decision 95Nu369

In this regard, Article 67 (2) of the Enforcement Decree of the Restriction of Special Taxation Act provides that "Direct farming" means that "a resident is engaged in cultivating crops or growing perennial plants on his own farmland at all times or with his own labor at least half of farming works." Here, "a farmer who cultivates or cultivates at least half of farming works with his own labor can be abused as a means of tax evasion." In addition, the burden of proving "direct farming" as a requirement for reduction or exemption of capital gains tax shall be strictly interpreted in that the above provision can be abused as a means of tax evasion (see, e.g., Supreme Court Decision 94Nu996, Oct. 21, 1994).

2) Whether the transferred farmland of this case was directly cultivated

갑 제1호증의 1의 기재, 증인 송DD의 증언에 따르면, 송DD는 이 사건 양도농지 인근에서 농사일을 하던 사람으로서 원고와 그 가족들이 이 사건 양도농지에서 파종, 김매기 등 농사일을 하는 것을 보았고, 원고로부터 기계대여료 및 품삯을 받고 이 사건 양도농지의 농사일을 해준 적이 있다고 진술한 사실은 인정된다.

However, in light of the following facts, it is difficult to recognize that the Plaintiff cultivated the farmland of this case by inserting not less than 1/2 of the farming work for not less than 3 years prior to the date of transfer by inserting its own labor force. Moreover, it is insufficient to recognize the same solely with the descriptions and images of the evidence No. 2-1, evidence No. 3-1, evidence No. 4-1, evidence No. 5-1, and evidence No. 5-1 through No. 19.

Rather, in full view of the aforementioned evidence and evidence Nos. 3, 4, 5, Eul evidence Nos. 9, 10, Eul evidence No. 11-1, 2-2, and the overall purport of video and pleading, the following facts can only be acknowledged.

① 이 사건 양도농지는 총면적이 6,363㎡로서 평으로 환산하면 약 2,000평 가까이 되는 면적이다. 그런데 원고는 이 사건 양도농지를 경작하기 위한 농기계를 보유하지 아니하였고, 송DD는 농기계가 필요한 작업은 원고로부터 기계대여료 및 품삯을 받고 자신이 수행하였다고 진술하였다.

② In addition, SongD stated that fruit trees, such as fruit trees planted on the farmland transferred in this case had no fruits harvested, and whether the said fruits harvested and sold were harvested and sold.

③ The Kim E-E, who resides near the transferred farmland of this case, stated that he had a vinyl house installed on the ground of some of the transferred farmland of this case from around 2005 to around 2006, and that he was able to sprinkling, farming, etc.

④ From June 26, 2013 to July 5, 2013, when a public official in charge of the Defendant conducted on-site verification of the transferred farmland of this case, the instant transferred farmland of this case was left alone, and as a result, he heard the statement that the farmland of this case had not been cultivated for about three years since the fact that the farmland of this case had not been cultivated.

⑤ Meanwhile, from around 2005 to around 2008, the Plaintiff worked as the head of the △△ branch office of △△△ Corporation, and around 2005 to around 2006, KRW 00,000,000 for around 2006, KRW 000 for around 2007, and KRW 00,000 for around 200,000 for around 2008.

④ After the retirement of △△ Corporation, the Plaintiff run a cadastral survey business in the name of △△ Corporation from March 1, 2009 to March 1, 2009, and the reported income in 2011 was KRW 000,000,000, and the reported income in 2012 was KRW 00,000,000.

Therefore, the plaintiff cannot be deemed to have cultivated farmland of this case directly for not less than three years before the transfer date, and the plaintiff's assertion against this part is without merit.

3) Whether the substitute farmland of this case was directly cultivated

In light of the following facts, it is not sufficient to recognize the fact that the Plaintiff acquired farmland in substitute land in this case by inserting not less than 1/2 of the farming work after the Plaintiff acquired farmland in substitute land in this case, and there is no other evidence to prove otherwise.

Rather, in full view of the aforementioned evidence and the written evidence Nos. 3 and 6 and the purport of the entire pleadings, the following facts can only be recognized.

① The instant substitute farmland is the area of 3,422.8 square meters, and when a public official in charge of the Defendant conducted on-site verification of the instant substitute farmland from June 26, 2013 to July 5, 2013, the said farmland was in a state where rice is planted using the ridge farming method, and it was confirmed that the instant substitute farming method is difficult to cultivate outside persons due to its characteristics.

② NonpartyF, the head of the village with the land of this case, stated that, although the owner of the land of this case is not aware of the exact owner of the land of this case, the residents of this village cultivated and managed it, and that the consultation between the residents of this case and the matters concerning seeds and seedlings and environment-friendly agricultural chemicals are resolved by consultation among the parties of this case.

③ 이GG은 이 사건 대토농지가 있는 마을 토박이로서 콤바인, 트랙터 등 대형 농기계를 보유하고 있고, 원고로부터 품삯을 지급받아 이 사건 대토농지에 대한 로터리작업, 모내기작업, 추수작업을 수행한 사실이 있다고 진술하였다.

Therefore, the plaintiff cannot be deemed to have cultivated the substitute farmland of this case directly after acquiring it, and the plaintiff's assertion against this is without merit.

3. Conclusion

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