Early High Court Decision 2014Gu4178 ( November 3, 2014)

Since the land of this case was cultivated directly for not less than three years, the provisions on reduction and exemption of farmland shall apply.

The testimony is relatively concrete and consistent, consistent with the contents of the certificate of fact of cultivation prepared by Kim 00, etc., and its credibility may be recognized, and there is a difficulty in rejecting its credibility only with the statements of neighboring residents who oppose it.

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

Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act

Disposition Disposition Imposing Capital Gains Tax

Gong00

Head of Dong Daegu Tax Office

National Flag

August 18, 2015

September 22, 2015

1. The Defendant’s disposition of imposition of KRW 00,00,000 (including additional tax) for the transfer income tax corresponding to the year 2013, which was rendered against the Plaintiff on June 1, 2014, shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On April 9, 1979, the Plaintiff acquired 00 00 - 00 - 00 - 00 - 31-1 476 m2, 32-1 - 539 m2, and 156 m2, such as 32-1 m2, 539 m2, and 34 m24 m2 (hereinafter “instant land”). The Plaintiff transferred the instant land to 00 Metropolitan City on the ground of an agreement on the land for public use on July 31, 2013. Meanwhile, on October 10, 2013, the Plaintiff acquired 00 m200 -00 - 87-1 692 m2.

B. On September 6, 2013, when the Plaintiff reported the transfer income tax on the instant land, the Plaintiff asserted that the instant land constituted the reduction or exemption of the transfer income tax on the farmland substitute land 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 00,000,000.

C. As a result of an investigation into the Plaintiff’s content of capital gains tax, the Defendant deemed that the Plaintiff did not directly cultivate the instant land for at least three years, and 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 notified the Plaintiff on June 1, 2014 of the rectification of KRW 00,000,000 (including penalty tax paid in bad faith) for capital gains tax reverted to the Plaintiff in 2013.

D. The Plaintiff appealed and filed an appeal on July 24, 2014. However, the Tax Tribunal dismissed the appeal on November 3, 2014.

Facts that there is no dispute over the basis of recognition, Gap evidence 1, 10, 11 (including branch numbers for those with additional numbers; hereinafter the same shall apply), Eul evidence 4 through 7, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The parties' assertion

1) The plaintiff's assertion

After the closure of a furniture factory, the Plaintiff acquired the instant land on April 9, 1979, and returned to a foreign country on May 1, 1983, and resided in the instant land on April 21, 2010, and cultivated spores and vegetables, etc. in the instant land, while living in 00,000 and 31,00,000,000,000 from the date of expropriation of the land until July 31, 2013. Since the Plaintiff acquired another farmland within one year from the expropriation of the instant land, it constitutes reduction and exemption of capital gains tax on the farmland substitute land under Article 70 of the former Restriction of Special Taxation Act. Nevertheless, the Defendant’s disposition that did not apply the reduction and exemption provision on farmland substitute land on other premise is unlawful.

2) The defendant's assertion

In order to reduce capital gains tax pursuant to the provisions on reduction and exemption of farmland, the Plaintiff must prove that the Plaintiff directly cultivated the instant land for at least three years (as of July 31, 2013) at the time of transfer (as of July 31, 2013), and that the period of stay in the Republic of Korea after reporting the residence of a foreign nationality Korean in April 2010 to the date of transfer of the instant land is only 26.5 months, and ② the neighboring residents of the instant land stated that “the instant land has been consumed by the native residents of the Republic of Korea as the land left for a long period,” ③ the materials submitted by the Plaintiff (a certificate of the registration of an agricultural or fisheries business entity, a certificate of cultivation, and a report of natural disaster damage, etc.) are insufficient to recognize that the Plaintiff directly cultivated the instant land, in light of the distance between the Plaintiff’s residence and the instant land. Accordingly, the Plaintiff cannot be deemed to have directly cultivated the instant land for at least three years. Therefore, the Defendant’s disposition of reduction and exemption of farmland is lawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) The Plaintiff acquired the instant land after running a furniture factory in 00-Gu 00-Gu 00-dong in around 1979, and closed the business in 1979. On April 21, 2010, the Plaintiff returned to Korea on April 21, 201 and completed a report on the domestic domicile of a foreign nationality Korean on the same day.

2) On June 10, 201, the Minister for Food, Agriculture, Forestry and Fisheries notified the Plaintiff that agricultural and fishery business information has been registered pursuant to Article 4 of the Act on Fostering and Supporting Agricultural and Fisheries Enterprises and Article 3 of the Enforcement Rule of the same Act.

3) Around April 1979, 00, 00, 000, 1979: (a) verified that the Plaintiff had actually cultivated the instant land from May 1, 1983, 200, 100, 22, 22, 00, 33, 100, 200, 200, 200, 200, 200, 200, 200, 200, 200, 200, 33, and 200, respectively, issued a written confirmation

4) According to the compensation details in the 00 Metropolitan City, the Plaintiff received compensation of KRW 00,000,000 for the instant land, bank trees, warehouse, etc. on the instant land and its ground in connection with the construction of the 00-gu YY.

5) In a report on the fact-finding survey on farming construction works in the 00Y-gu, stating that the Plaintiff confirmed that the Plaintiff was the owner of the instant land at the time of June 4, 2013 as the owner of the instant land.

6) On June 201, the Plaintiff filed a report on natural disaster damage with respect to the head of 00 -00 -00 - 00 - 32 - 978 m2 (round March 11, 2013, the Plaintiff submitted a report on natural disaster damage with respect to 00 -0 - 00 - 00 - 32-1, which is a part of the instant land, among the instant land).

7) The details of the Plaintiff’s resident registration change and entry and departure from the acquisition to the time of transfer are as follows.

Details of changes in the resident registration of the plaintiff.

8) From the perspective of springing around 1979, 00 testified to the effect that “the Plaintiff was directly engaged in cultivating the instant land while getting on and getting on a truck, bus, etc. at the Plaintiff’s residence.” From this court, 00 testified to the effect that “the Plaintiff directly observed the Plaintiff’s farming of fruit trees, vegetables, etc. from the instant land since 4-5 years before this court, and that “the Plaintiff was present during the period of residing abroad.”

Facts that there is no dispute over recognition, Gap's evidence 4 through 6, 9, 10.12, Eul's evidence 1 through 3, witness 00, 00 testimony and the purport of the whole pleadings.

D. Determination

1) Relevant regulations and legal principles

Article 70 (1) of the Restriction of Special Taxation Act provides that an amount of tax equivalent to 10/100 of capital gains tax shall be reduced or exempted for income accruing from substituted farmland which falls under cases prescribed by Presidential Decree by a resident prescribed by Presidential Decree residing in the seat of farmland by such method as prescribed by Presidential Decree due to a necessity for cultivation, and 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 an area within a Si/Gun/Gu where farmland is located for three years or longer (title 1), an area within a Si/Gun/Gu adjacent to an area under subparagraph 1 (title 2), an area within 20km in a straight line from the relevant farmland (subparagraph 3) and that a person who resides in an area falling under any of the former farmland for cultivation or new farmland for at least 2 years and transfers such farmland to his/her own or new farmland within 3 years under paragraph (1).

On the other hand, the burden of proving the direct cultivation of the transferred land as the requirement for reduction of capital gains tax on self-arable land is against the person liable for tax payment who asserts reduction or exemption of capital gains tax (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 2002).

2) Whether the Plaintiff directly cultivated the instant land for at least three years

In light of the following circumstances, it may be acknowledged that the Plaintiff directly cultivated the instant land for not less than three years at the time of transferring the instant land in light of the following circumstances, which can be seen by comprehensively taking account of the aforementioned facts as seen earlier evidence, Gap evidence Nos. 7, 8, and 14, and the purport of the entire pleadings. Therefore, the Defendant’s disposition denying the application of the farmland substitute land reduction and exemption rules to the Plaintiff on different premise is unlawful, and the Plaintiff’s assertion is with merit

① According to the National Tax Service’s established rules (Written 4 Team-341), “the cultivation period” among the requirements for the provisions on reduction and exemption of farmland under the former Restriction of Special Taxation Act and its Enforcement Decree means the period for which the previous farmland was actually cultivated for at least three years in total, and even if the period of the Plaintiff’s stay in the Republic of Korea after returning from April 9, 1979 to November 4, 1983 after the date of transfer of the land of this case falls short of three years, it seems that the total period of stay in the Republic of Korea from April 9, 1979 to the date of transfer of the land of this case would meet the “resident in the location of the farmland of this case for at least three years.”

② During the period of the Plaintiff’s residence in this Court, the Plaintiff testified that he was directly engaged in rice farming and fruit farming in the instant land. The testimony is relatively specific and consistent, and its credibility is recognized in line with the contents of the certificate of cultivation written by Kim Sung-dong, etc. The statement by the neighboring residents that are opposed thereto is difficult to reject its credibility.

③ Around June 2013, a public official in charge confirmed that the Plaintiff fell under trees on the instant land, and accordingly, the Plaintiff was compensated for farming losses for the instant land and obstacles.

④ In light of the fact that the Plaintiff registered an agricultural and fisheries business entity on June 201, reported natural disaster damage to the instant land of the same month, and the Plaintiff purchased fertilizers, agrochemical, agricultural materials, and fruit seedlings from May 201 to August 2012, it is natural to deem that the Plaintiff directly cultivated the instant land after the Plaintiff’s return, and there is no other circumstance to recognize that there was the surrogate cultivator other than the Plaintiff.

⑤ In light of the fact that in the instant land, the Plaintiff testified that “at the time when a leap00 was a rice farmer,” the Plaintiff was using a 1.5 tons truck on the instant land, and was making a clerical error in writing on the bus,” it is difficult to readily conclude that the Plaintiff did not directly cultivate the instant land solely on the ground that the Plaintiff did not reside in the vicinity of the instant land.

6. There was no fact that the Plaintiff closed down a furniture farm operated by the Plaintiff from the time of 1979 and acquired the instant land, running another business in the Republic of Korea, or running another business in the Republic of Korea, or making a workplace life

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition by admitting it.