Cho High-2017-Seoul Government-1472 (Law No. 26, 2017)

Whether farmland has been reclaimed for eight years or not, and whether it constitutes non-business land

Generally, the burden of proof for the facts that meet the requirements for reduction or exemption of capital gains tax is a taxpayer claiming reduction or exemption of capital gains tax

Article 95 of the Income Tax Act

2017Gudan75371 Revocation of Disposition of Imposing capital gains tax

a

AA Head of the Tax Office

May 2, 2018

May 2, 2018

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 x members of capital gains tax belonging to the year 2015 against the Plaintiff on December 7, 2016 shall be revoked.

1. Details of the disposition;

A. On September 30, 2015, the Plaintiff calculated the tax base and tax amount by applying the special deduction for long-term possession and the reduction of capital gains tax for self-owned farmland for at least eight years (hereinafter referred to as "transfer"), based on the tax base and tax amount calculated by applying the special deduction for long-term holding and the reduction of capital gains tax for self-owned farmland for at least eight years (hereinafter referred to as "preliminary return/self-return") and paid capital gains taxx in advance by preliminary return on April 4, 2002, after acquisition on April 2, 201 (hereinafter referred to as "preliminary return/self-payment") of the same Ri as 11-1 square meters per annum, such as 10-4 910 square meters per annum, and on July 2, 2015.

B. Meanwhile, on the other hand, the Plaintiff acquired a 312 square meters of Gyeongnam*** * Eup* 160-4 square meters of 312 square meters, but transferred on February 27, 2015, and on July 23, 2016, the Plaintiff reported and voluntarily paid the capital gains taxx by the deadline to the head of the AA Tax Office.

C. From October 6, 2016 to November 9, 2016, the Defendant investigated the Plaintiff’s transfer income tax for the taxable period of 2015 (the income accrued from each transfer at each transfer at each time during the taxable period of 2015), and determined the tax base and tax amount by excluding the special deduction for long-term possession and the reduction of self-farmland for at least eight years in relation to the transfer at each transfer at each time, and determined and notified the Plaintiff of the capital gains taxx (including the additional tax) for the transfer income tax for the year 2015 (hereinafter “instant disposition”).

D. On February 25, 2017, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on February 25, 2017, but the Tax Tribunal dismissed the appeal on July 26, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1, Eul evidence 1, 2, 11, 13, 14 (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff cultivated chip directly from the land of this case while residing in Gyeongnam***** group** unit** unit* unit* unit* unit* unit* unit* unit* unit* unit* unit unit of the building on August 28, 2014 (hereinafter referred to as "period of dispute"), which had been located in 'resident registration' in 'Y** unit* unit* unit'. The key period falls under all items of subparagraph 1 of Article 168-6 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26982, Feb. 17, 2016; hereinafter the same shall apply) and thus, it does not constitute a long-term special deduction for possession of land of this case, which was amended by Act No. 1348, Jul. 24, 2015; hereinafter the same shall apply) and excluded from the special deduction for long-term possession.

(b) Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

C. Determination

1) Relevant legal principles

Generally, the burden of proof on the facts that meet the requirements for reduction or exemption of capital gains tax lies on a taxpayer who asserts reduction or exemption of capital gains tax. However, Article 95 (2) of the former Income Tax Act provides that "any assets subject to special deduction for long-term holding (excluding unregistered transferred assets under Article 104 (3) and non-business land under Article 104-3) under Article 94 (1) 1, the holding period of which is at least three years." In light of the form and system of such legal provisions, in principle, the taxpayer who claims special deduction for long-term holding, bears the burden of proving that the transferred assets constitute assets under Article 94 (1) 1 of the former Income Tax Act, which are subject to special deduction for long-term holding, but it is reasonable to deem that the taxpayer bears the burden of proving that the assets constitute non-business land under Article 104-3 of the former Income Tax

In addition, according to Article 104-3 (1) 1 (a) of the former Income Tax Act, in the case of farmland, the land for non-business use refers to the farmland the owner of which does not reside in the seat of the farmland or is not cultivated by himself/herself as prescribed by the Presidential Decree for the period prescribed by the Presidential Decree during which he/she owns the land, and it is not easy to directly prove the fact that the portion of the "non-business use land" was not self-sufficient, unlike the fact that the plaintiff was not self-sufficient. In such a case, it is not easy to directly prove the fact that it was not self-sufficient, but in particular,

Meanwhile, Article 168-8 (2) of the former Enforcement Decree of the Income Tax Act, which embodys the meaning of "self-defense" under the delegation of Article 104-3 (1) 1 (a) of the former Income Tax Act, stipulates the concept of self-defense related to non-business land as the same content as the self-defense provision under Article 2 (5) of the Farmland Act. According to this, "self-defense" means that a resident is engaged in the cultivation of agricultural crops or the growing of perennial plants in his own farmland, or "a farmer is engaged in the cultivation or growing with his own labor not less than 1/2 of his own work." The meaning of "self-help" in this context is interpreted as a grammatic interpretation and it shall be deemed that one-half or more of his own work should be in charge of himself or it satisfies the requirements of self-defense, and it shall not be deemed that the term "self-defense" includes the cultivation by living together with his family members or the employment of another person under his or her responsibility (see, e.g., Supreme Court Decision 2002Du727.

2) Determination

A) In full view of Gap evidence Nos. 1, Eul evidence Nos. 3, 4, 6, 7, 8, and 12, Eul evidence Nos. 9 and Eul evidence Nos. 9, the following facts can be acknowledged.

① The Plaintiff, as the representative director of the BB World Co., Ltd. (hereinafter referred to as the “BB World”) located in the Republic of Korea-U.S. from August 26, 2010 to July 2, 2015, which is the date of the instant transfer (the dispute period from August 7, 2008 to August 28, 2014), has been operating the said company. The amount of income and income of the said company is as follows (amount: KRW 00,000).

(2) Details of the change of address on the Plaintiff’s resident registration are as follows:

③ In the building ledger of a building on the ground of 442 that the Plaintiff claimed that he had resided during the issues period, the use of the building was stated as 'low temperature warehouse' (hereinafter referred to as 'low temperature warehouse building'). As to the low temperature warehouse building on January 23, 2003, each ownership transfer registration was completed on November 8, 2013 in the name of the Plaintiff, CCFC Co., Ltd. (hereinafter referred to as 'agricultural company') and on November 8, 2013.

④ The Plaintiff’s wife and her children resided in Seoul***dong*** apartment 226 dong 1001 during the issues period.

⑤ The Cash Receipt received by the Plaintiff during the key period was issued at the place of business located near Songpa-gu Seoul, where most of the Plaintiff’s family members reside, the place of business located near Jeonnam-gun, which is the seat of the BB World, or a rest place located near the Highway that connects South-Naman-gun and Seoul, and it was not issued at the place of business located near the instant land.

④ On January 23, 2003, the Plaintiff acquired land and buildings thereon, **** Eup* 422 land and buildings thereon, 442-1 land, 491-1 land, 492-1 land, and 492-3 land (hereinafter referred to as “land, ” in total, hereinafter) and transferred on November 8, 2013.

7) Upon the taxing authority’s prior notice of imposition of capital gains tax of KRW 67,745,930 on May 3, 2015, the Plaintiff filed a request for a pre-assessment review on June 1, 2015. The Plaintiff entered his/her occupation as a person engaged in agricultural product distribution business by purchasing agricultural products, such as spad from the mountainous district, and selling agricultural products to the agricultural product wholesale market.

8. The land of Gyeongnam-gun is about 18km away from the land of this case.

B) In light of the aforementioned legal principles by comprehensively taking account of all the following circumstances revealed by considering the purport of the entire pleadings, it can be sufficiently confirmed in light of the empirical rule that the Plaintiff did not directly cultivate the instant land while residing in a low temperature warehouse during the key period.

In light of the residence of the Plaintiff’s family, the location of the business place, the scale of the business, and the details of the Plaintiff’s issuance of the Plaintiff’s Cash Receipt during the issues period, the Plaintiff appears to have frequently visited the location of the Plaintiff’s family in Songpa-gu Seoul and the Seoul-gu Seoul-do-U.S.-U.S.-U.S.-U.S.-U.S.-U.-U.S.-U.-U.S.-U.-U.S.-U.S.-U.-S.-U.S.-U.S.-U.S.-U.

(C) Although the Plaintiff asserted that there was a residential space in a low temperature warehouse building, there is no objective material to acknowledge it. Furthermore, even if so, it is difficult to understand that the Plaintiff was able to live in a low temperature warehouse building to directly cultivate the instant land, which is a total area of 1,283 square meters away from his family in Songpa-gu Seoul.

C. The Defendant pointed out, through the instant written response, that the Plaintiff failed to submit objective data, such as the farmland ledger, seeds, and pesticide purchase details, and the release of agricultural products. However, the Plaintiff failed to submit such objective data until the closing of argument.

Although the Plaintiff submitted the photograph of the instant land (No. 2 through 7) and the fact-finding certificate (No. 9-1 through 4) by the residents in the neighboring areas of the instant land, the above photographs are merely photographs of the current state of the instant land, and thus, they do not have any evidence to directly prove that the Plaintiff cultivated the instant land by using one-half or more own labor force, and it is difficult to view the confirmation document itself as objective data.

The Plaintiff did not directly cultivate in the land of the Gyeongnam-gun. However, in a case where the Plaintiff resided in a mar warehouse building and directly cultivated the instant land, it would be reasonable in terms of cost reduction to directly cultivate the land of the 18km away from the instant land.

Inasmuch as the Plaintiff had been engaged in a long-term agricultural products distribution business as stated in the pre-assessment review claim regarding the land of Gyeongnam-gun, it is natural to use the instant land for the purpose necessary for agricultural products distribution business, or to cultivate it by employing another person under his responsibility and account from the instant land, rather than engaging in new cultivation business in the instant land.

㉳ 원고가 저온창고 건물의 소유권이 농업회사법인에 이전된 2013. 11. 8. 이후 농업회사법인으로부터 저온창고 건물에서 거주하는 것을 허락받았다는 점을 입증할 만한 자료도 없다.

C) The instant land constitutes land for non-business use excluded from the special deduction for long-term possession. The instant disposition is lawful.

3. Conclusion

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