Cho-2016-Divisions-3419 ( December 07, 2016)

The burden of proof for direct farming is against the taxpayer who asserts the reduction or exemption of capital gains tax.

The provisions of Article 70 of the Restriction of Special Taxation Act can be abused as a means of tax evasion, so it should be strictly interpreted as a grammatic approach, and the burden of proof for direct cultivation is against the person liable to pay capital gains tax reduction

Article 70 of the Restriction of Special Taxation Act for Substitute Land for Farmland

Changwon District Court 2017Guhap50605 Revocation of Disposition of Imposing capital gains tax

ZZ

YThe director of the tax office

October 24, 2017

November 21, 2017

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 for the Plaintiff in June 1, 2016 shall be revoked 61,844 and the disposition of imposition of capital gains tax for the Plaintiff in 2010.

1. Details of the disposition;

A. On January 19, 2007, the Plaintiff acquired and possessed 60X-4 Doo 292 m2, 60X-5 m2, 60X-6 m2, and 92 m2 m2 (hereinafter “transfer farmland in this case”). On May 17, 2010, the Plaintiff acquired the transfer farmland in this case as the transfer farmland in the FF-type improvement project implemented by DDD on May 17, 201, and acquired the land in this case on May 11, 2012.

B. On August 2, 2010, the Plaintiff filed an application for reduction or exemption of capital gains tax on the farmland substitute land under Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010; hereinafter the same) with the Defendant for a preliminary return of capital gains tax of KRW 263,61X,00, acquisition value of KRW 63,75X,00,00, and calculated tax amount of KRW 47,18X,420.

C. The Defendant conducted an investigation of capital gains tax from April 4, 2016 to December 22, 2016, and 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 transferred farmland, and that the Plaintiff did not cultivate the farmland within one year after the acquisition of the instant substitute land, and imposed capital gains tax on the Plaintiff on June 1, 2016 (hereinafter “instant disposition”).

D. The Plaintiff filed a request for a trial with the Tax Tribunal on September 1, 2016 upon filing an objection on June 29, 2016, but was dismissed on December 7, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, 7, 10, 25, and the purport of the whole pleadings

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. The issues of the instant case

The issue of this case is whether the plaintiff has cultivated directly for at least three years the transferred farmland and substitute farmland in this case.

B. Whether the transferred farmland of this case was directly cultivated for three years or more

1) The plaintiff's assertion

The Plaintiff, who was the Plaintiff, received subsidies for rice income in 2007 and 2008 for the transferred farmland of this case for convenience, and the Plaintiff directly cultivated the transferred farmland for not less than three years.

2) Determination

A) In order to apply the reduction and exemption of capital gains tax on the farmland substitute land pursuant to Article 70 of the former Restriction of Special Taxation Act, the Plaintiff must directly cultivate the transferred farmland and substitute land for not less than three years, and "direct farming" here means that a resident is engaged in the cultivation of crops or the growing of perennial plants on his own land at all times or in the cultivation of not less than 1/2 of the farming works with his own labor. In addition, "a farmer cultivates or cultivates not less than 1/2 of the farming works with his own labor" can be abused as a means of tax evasion, and the burden of proving "direct farming" as a requirement of capital gains tax reduction and exemption shall be strictly interpreted as a logical sense in that the said provision may be abused as a means of tax evasion (see, e.g., Supreme Court Decision 94Nu996, Oct. 21, 1994).

B) In light of the following circumstances, it is insufficient to recognize that the Plaintiff directly cultivated the transferred farmland of this case for three years or more, based on the evidence submitted by the Plaintiff, in light of the following circumstances acknowledged by the respective descriptions of Gap evidence Nos. 9, Eul evidence Nos. 1 through 4 (including serial numbers; hereinafter the same shall apply), and the fact-finding inquiry and reply with respect to the AA market of this Court, and the purport of the whole pleadings, the evidence submitted by the Plaintiff is insufficient. The items of evidence Nos. 11 through 13, 24, and 27, which correspond to the Plaintiff’s assertion, are likely to be trusted to the extent inconsistent with them, and there is no other evidence to acknowledge them. Therefore, the Plaintiff cannot be deemed to have directly cultivated the transferred farmland of this case for three years or more.

(1) From August 1, 2002, the Plaintiff was operating HH until now. From 2007 to 2015, the Plaintiff received KRW 100 million from approximately KRW 50 million each year, and from 2010 to 2014, the Plaintiff received benefits while working in JJ, JJ, 2015, and 2016.

(2) In light of the fact that the Plaintiff has a certain occupation, the distance between the Plaintiff’s residence or place of business and the transferred farmland of this case falls under approximately 35km and about 39km, it is difficult to view that the Plaintiff was engaged in cultivating crops or growing perennial plants on his own labor, or cultivated or cultivated not less than 1/2 of the crops on the transferred farmland of this case. Rather, in light of the Plaintiff’s receipt of subsidies for rice income from the transferred farmland of this case in 2007 and 2008, it is reasonable to deem that ChoG had directly cultivated the transferred farmland of this case.

(3) The certificate of pesticide purchase (Evidence No. 12-2 of the A), submitted by the Plaintiff, states that the Plaintiff purchased pesticide on May 25, 2010 and June 11, 2010. This constitutes the details of pesticide purchase before acquiring the instant substitute farmland after the Plaintiff transferred the instant farmland. Moreover, the certificate of pesticide purchase (Evidence No. 12-3 of the A), the national card and the record of the use of modern card (Evidence No. 27 of the A), lack credibility as data on the transferred farmland, and the Plaintiff did not submit any other data to recognize that the transferred farmland was cultivated.

C. Whether the substitute farmland of this case was directly cultivated for three years or more

1) The plaintiff's assertion

After acquiring the instant substitute farmland, at least from May 2013, the Plaintiff began rice shed from May 2013, and since the Plaintiff’s family members consumed rice harvested in 2013, the Plaintiff directly cultivated the instant substitute farmland for three years after acquiring it.

2) Determination

In light of the following circumstances acknowledged by the overall purport of the statements and arguments in the evidence Nos. 5 and 9, namely, ① the Plaintiff was a vinyl installed by the former owner on the said farmland at the time when the Plaintiff acquired the substitute farmland in this case around October 2012. However, even around March 2013, a vinyl house was installed in the aerial railway around September 2013, and ② the aerial railway (Evidence No. 29) was removed in the aerial railway around September 2013. However, the Plaintiff’s purchase of rice in 2014 existed in 2013, and it is unclear whether the Plaintiff was a rice farmer in the instant substitute farmland in 2013, the evidence submitted by the Plaintiff alone is insufficient to recognize that the Plaintiff directly cultivated the farmland in this case for three years after the Plaintiff acquired the substitute farmland in this case, and there is no reason to prove otherwise. Accordingly, there is no reason to believe otherwise.

4. Conclusion

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