early 2009west2960 ( December 29, 2009)

Income accrued from the transfer of forest trees shall be deemed business income only if there is business feasibility.

The fact that afforestation has been conducted in forest land and has been conducted after it is recognized that there is no evidence to prove the fact that the afforestation has been continuously conducted, there is no authorization of a forest management plan or business registration for the forest project, and there is no method of public announcement, such as registration of preservation of ownership, etc. for forest trees, the transfer income of forest land and transfer income of forest trees may not be separated from the forest land.

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

○ ○

Head of Seodaemun Tax Office

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The defendant's disposition rejecting capital gains tax correction against the plaintiff on April 29, 2009 shall be revoked.

1. Details of the disposition;

A. On June 4, 1975 and the 111th of the same month, the Plaintiff acquired and owned the forest land and river land located in ○○○○○○○○-gu, ○○○○○○-si (hereinafter the combination of the said forest land, etc.), and transferred total amount of KRW 9,00,000,000 to the △△△△ on February 28, 2007 and January 25, 2008 and the 30th of the same month to the △△△△, etc.

B. On April 30, 2007, the Plaintiff: (a) filed a preliminary return of capital gains tax base based on the actual transaction price with respect to the transfer of 82,645 square meters of the above ○○○○-ri, 54-1, 54-4 forest land among the instant forest land; (b) paid KRW 398,69,540 calculated by adding the actual transfer value to KRW 1,858,050,000, and the actual acquisition value to KRW 223,729,582; and (c) thereafter on March 31, 2008, the Plaintiff additionally paid KRW 54-3,54-5, and 591-1 forest land totaled of KRW 191,736 square meters from the instant forest land to KRW 7,141,50,000,000; and (d) calculated capital gains tax based on the said preliminary return of capital gains tax to KRW 165,71685,27167.

C. On March 2009, in the event that the Plaintiff transfers forest land and forest trees to the Defendant along with the transfer of the instant forest, the income accrued from the transfer of forest land falls under the transfer income, and the income accrued from the transfer of forest trees falls under the business income, and thus, the transfer income of this case is calculated by dividing the transfer income of this case into the transfer income from the transfer of forest land and the business income from the transfer of forest trees according to Article 51(8) of the Enforcement Decree of the Income Tax Act, and calculated the transfer income from the transfer of forest according to the standard market price, and filed a request for correction with the purport that the transfer income tax of this case was paid in excess of KRW 1,406,964,897.

D. On April 29, 2009, the Defendant rendered the instant disposition rejecting the instant claim for correction on the ground that there is no evidence to acknowledge that the instant transfer subject was traded with the feasibility of forest trees, or that the income generated from the transfer of forest trees cannot be deemed business income due to lack, in order to calculate the income generated from the transfer of forest trees by separating the transfer of forest land from the transfer of forest land to the business income from the transfer of forest trees.

E. On July 24, 2009, the Plaintiff filed a request for a trial with the Tax Tribunal on July 24, 2009, but was dismissed on December 29, 2009.

[Ground of Recognition] Unsatisfy, Gap evidence 1 to 3 (including paper numbers), Eul evidence 1 to 4 (including paper numbers)

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

After acquiring the instant forest land on June 4, 1975 and the 111th of the same month, from around 1978, the Plaintiff afforested from around 1978 by planting the state subsidy and self-owned expenses, and transferred the instant forest land along with its ground afforestation trees. In the event that such forest land and forest trees are transferred at the same time, the income accrued from the transfer of the forest land falls under the transfer income tax, the income accrued from the transfer of the forest land falls under the business income, and the income from the transfer of the forest land falls under the income from the transfer of the forest, and the transfer income from the transfer of the forest is calculated according to the standard market price. Accordingly, according to this, it is apparent that the instant transfer income tax was paid in excess of KRW 1,406,964,897 in accordance with the standard market price. Thus, it is unlawful for the Defendant to refuse a correction claim by the Plaintiff under the premise that the above excess amount is refunded, despite its duty to refund.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) According to Articles 4(1)1 and 3, 19(1)1, and 94(1)1 of the Income Tax Act, income generated from forestry falls under business income subject to global income tax, and income generated therefrom falls under transfer income tax, which is subject to transfer income tax. In this regard, Article 51(8) of the Enforcement Decree of the Income Tax Act provides that income generated from the transfer of forest land shall not be included in the calculation of total income amount in cases where the income amount of business felling or transferring the forest land is calculated with the forest land when the forest land is transferred along with the forest land. However, business income is income generated from a specific business and refers to the social activity continuously and repeatedly conducted with an independent position. In light of the above provisions, independence, continuity, and repetition to be recognized as transfer income tax, and the contents of the above provisions, etc., “income generated from the transfer of forest land” shall not be included in the transfer income tax for the purpose that the transfer of the forest land is not included in the transfer income tax when the forest land is transferred as part of the forest land.

(2) According to the Plaintiff’s basic health zone, Gap’s 2, 4, 5, and Gap’s 6-1 and 2 as to this case’s transfer income, the Plaintiff acquired ○○○○○-ro forest land 54,381 square meters (which was divided into the instant forest land, etc. after death) prior to the division, and then afforested 15,50 trees and 45,000 trees on the above forest land, respectively, on the premise that the Plaintiff did not have any more than 193 forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related forest land-related land-related forest land-related forest land-related forest-related forest land-related forest-related forest land-related forest land-related land-related forest-related forest land-related zone.

(3) Therefore, the instant disposition is lawful, based on the premise that the entire income accrued by the Defendant from the transfer of the instant forest is subject to capital gains tax.

3.In conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.