(a) In case where a farmer transfers a number of parcels of land owned by him/her, and purchases new farmland to substitute only part of them, whether the transfer income from the transfer of the previous land is a non-taxable income under subparagraph 6 (j) of Article 5 of the Income Tax Act; and

B. Whether a substitute land needs to be considered as substitute land for cultivation in case where a person transfers farmland to another person and acquires another farmland within one year;

A. Article 5 subparagraph 6 (j) of the Income Tax Act and Article 14 (7) of the Enforcement Decree of the same Act that does not impose income tax on the income accrued from substitute land for farmland is determined according to the taxpayer's choice if the farmland newly purchased meets the requirements for substitute land in respect of part of the farmland transferred according to its size and value, even in a case where a farmer transfers a lot of land, and he newly purchases a lot of land to substitute land only for the whole part, as well as for a case where a farmer transfers a lot of land and substitute land for the whole part, and if it is unclear which part of the previous farmland transferred, it shall be determined according to the taxpayer's choice.

B. In a case where a farmland has been cultivated and another farmland has been acquired within one year, such farmland shall be deemed to be substituted for the farmland as required for cultivation, unless there are other special circumstances.

Article 5 (j) of the Income Tax Act, Article 14 (7) of the Enforcement Decree of the Income Tax Act

A. Supreme Court Decision 90Nu9605 delivered on May 28, 1991 (Gong1991, 1809). Supreme Court Decision 87Nu791 delivered on October 26, 1987 (Gong1987, 1815)

[Judgment of the court below]

Head of Changwon Tax Office

Busan High Court Decision 93Gu4878 delivered on June 10, 1994

The judgment below is reversed, and the case is remanded to Busan High Court.

We examine the grounds of appeal.

1. On the first ground for appeal

The court below rejected the plaintiff's assertion that some of the real estate listed in the annexed Table 1 (22) of the judgment of the court below has been cultivated as an orchard for not less than 8 consecutive years until the plaintiff transferred it to the Korea Land Development Corporation that carries out a public project for the creation of the Kimhae Corporation on August 22, 191. Thus, the income accrued from the transfer of this orchard shall be the income accrued from the transfer of this orchard pursuant to Article 5 (6) 6 (d) of the Income Tax Act (amended by Act No. 4661 of December 31, 1993; hereinafter the same shall apply) and Article 14 (3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14083 of December 31, 1993; hereinafter the same shall apply) of the attached Table 1 of the judgment of the court below and there is no error in the misapprehension of legal principles as to the above related Acts and subordinate statutes, such as incomplete deliberation or

2. On the second ground for appeal

A. Article 5 subparagraph 6 (j) of the Income Tax Act and Article 14 (7) of the Enforcement Decree of the same Act that does not impose income tax on income accruing from substitute farmland for farmland does not apply to cases where a farmer transfers various lots of land, and a farmer newly purchases farmland to substitute for part of the land, as well as to cases where a farmer transfers a lot of land, and substitute land for the whole part of the land, if the newly purchased farmland meets the requirements for substitute land as provided in the above provision on part of the farmland transferred according to its size and value, it constitutes a case where the newly purchased farmland meets the requirements for substitute land as provided in the above provision. In this case, if it is unclear whether one of the previous farmland transferred is substitute for another, it shall be determined by the taxpayer's choice (see Supreme Court Decision 90Nu9605 delivered on May 28, 1991). If a farmland was cultivated and another farmland is acquired within one year, it shall be deemed that the farmland is substitute land for cultivation, barring any special circumstances (see Supreme Court Decision 87Nu719, Oct. 26, 1987).

B. According to the reasoning of the lower judgment, the lower court determined that the Plaintiff’s assertion that the Plaintiff acquired and cultivated the farmland of 1,340 square meters prior to the [14] No. 1,296 square meters prior to the [14] set forth in the [Attachment 1] List, and that the income accrued therefrom constitutes a non-taxation object under Article 5 subparag. 6 (j) of the Income Tax Act and Article 14 (7) of the Enforcement Decree of the same Act, since the Plaintiff acquired and cultivated the farmland of 1,340 square meters prior to the [14] set forth in the [Attachment 1] List No. 1] as indicated in the reasoning of the lower judgment, and that the newly acquired farmland constitutes a non-taxation object under Article 5 subparag. 6 (j) of the Income Tax Act and Article 14 (7) of the Enforcement Decree of the same Act. The lower court did not have any reason to acknowledge that the Plaintiff, at the time of transfer, purchased the farmland after the Plaintiff’s transfer to Korea Land Development Corporation.

C. However, the Plaintiff alleged that he acquired farmland at the time of Jinhae as a substitute land by transferring real estate (14) and it is obvious that the area of the newly acquired farmland was larger than the area of the farmland that was newly acquired, and that the Plaintiff acquired farmland at the time of the said Jinhae, after transferring the said real estate (14) within one year. Thus, in this case where it cannot be seen that there were special circumstances, the acquisition of farmland at the said Jinhae-si was substituted for farmland for the purpose of cultivation. Thus, the lower court should have examined whether the said transfer and acquisition meet the different requirements of non-taxation under the above provisions. However, the lower court should have determined that the area of the farmland newly acquired by comparing the entire farmland subject to taxation with the newly acquired farmland at the time of the said 23 piece of real estate, which was owned by the Plaintiff, did not affect the previous farmland area, and the lower court rejected the Plaintiff’s assertion, which did not err in the misapprehension of legal principles as to farmland or by failing to exhaust all necessary deliberations.

3. Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition with the assent of all Justices

Justices Kim Jong-sik (Presiding Justice)