Early High Court Decision 2009J3078 ( October 26, 2009)

Whether the forest part of the transferred forest meets the requirements for taxation of forest income;

As a result of confirming the register of afforestation for forest land, there is no data on the afforestation in the forest land, and the Plaintiff did not report and pay the forest income tax for the forest land of this case during that period, and it is insufficient to view that the forest trees in the forest land have been afforested (road planting) or the afforestation period has expired for more than five years only with the certificate of afforestation.

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

○ Of species ○

The director of the tax office

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The defendant's rejection disposition against the plaintiff on June 5, 2009 shall be revoked.

1. Details of the disposition;

A. On January 6, 2006, the Plaintiff transferred 4 lots of land, including 35,591 square meters, to ○○○○-dong, ○○○-si, ○○○○○-si, and reported and paid capital gains tax of KRW 2,687,96,580 based on the actual transaction price to the Defendant on March 20, 206.

B. Since then, among the above land on April 3, 2309, the Plaintiff filed a claim for correction of KRW 1,518,692,240 among the transfer income tax paid by asserting that income from the transfer of forest trees located in the 00-dong 0, 00 ○○-dong 10, 00 ○○-dong 10-1, 10-1, 13-1, 13-1, 13-1, 3, 13-1, 3, 300 (hereinafter “the instant forest”).

C. The Defendant rejected the above claim for correction on the ground that the transfer of forest trees on June 5, 2009 was conducted in order to see it as forest income, and that the said claim for correction cannot be viewed as forest income on the ground that it appears that only the value of the land was paid without calculating the forest trees value at the time of the initial transfer of forest land in this case (hereinafter “instant disposition”).

D. The plaintiff requested a judgment to the Tax Tribunal on July 31, 2009, but the above judgment was dismissed on October 26, 2009.

[Ground of recognition] Facts without any dispute, Gap evidence 1, Gap evidence 7, Gap evidence 19-2, Eul evidence 1, and the purport of the whole pleadings

2. Whether a disposition is lawful

A. The plaintiff's assertion

The Plaintiff reported and paid the transfer income tax while transferring the forest of this case, but the transfer of the forest of this case, separate from the forest land, transfers the forest trees, the afforestation period of which is not less than five years. Therefore, the part on the forest land should be taxed as forest income regardless of the feasibility of the transfer income and the part on the forest trees shall be taxed as forest income regardless of the business, and the total transfer value reported by the Plaintiff pursuant to Article 43(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890, Feb. 28, 2007) shall be deemed as the transfer value of the forest of approximately KRW 12.3 billion after deducting approximately KRW 5.4 billion based on the standard market value of the forest land among the total transfer value of approximately KRW 12.3 billion, and therefore, the transfer income

B. Details of the relevant statutes (attached Form 3)

According to Article 4(1)4 of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006), Article 23(1), Article 19(1)1 of the same Act (amended by Act No. 8144 of Dec. 30, 2006), and Article 43(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890 of Feb. 28, 2007) of the former Enforcement Decree of the Income Tax Act, income generated from cutting or transfer of forest trees in a forest land which has been afforested for not less than five years, (2) if the afforestation period is less than five years, it falls under forestry among business income, and (3) Income generated from cutting or transfer of trees naturally generated without planting, falls under the business income for profit-making purposes, notwithstanding the status of growing trees.

C. Issues and determination

i)a dispute:

According to the allegations and relevant statutes, the issue of the instant case is whether the requirements for imposing forest income tax on the forest portion among the instant forest land are satisfied, and specifically, whether the forest land and the forest trees are traded separately from the forest land among the instant forest land, or whether the value of forest trees is calculated in the purchase price of the instant forest land, and further, whether the instant forest land transferred by the Plaintiff was separately planted for not less than five years.

ii)judgments

In this case, comprehensively taking account of the following facts and circumstances acknowledged by comprehensively taking account of the descriptions of evidence No. 5-1, No. 5-2, evidence No. 19-2, evidence No. 19-2, witness Kim Tae-type testimony, and the overall purport of pleadings, the Plaintiff’s assertion is without merit, and the Defendant’s disposition is lawful.

A) On May 31, 2005, each sales contract between the plaintiff and the non-party company for the forest of this case includes only the subject matter to be sold as a whole, such as land, buildings, superficies, etc., and does not present any matters on forest trees at all.

In addition, the sales amount under the above sales contract was determined by multiplying the area of each land by 700,000 won per square meter.

The non-party company purchased the forest land of this case in order to build a new house, and should have taken into account that the cost of felling the forest trees in order to use the forest land for roads or for other purposes would have been paid or that the cost of relocating the forest trees would have been paid. Thus, the non-party company deemed that the purchase was not a situation of calculating the price of the forest trees separately.

According to the contents of the above sales contract, the calculation of the sales price, the purpose of the purchase by the non-party company, and the details of the use of the forest land in this case after the purchase, etc., the forest land and the forest in this case were separate trades, or it cannot be deemed that the forest land were included in the purchase price of the forest in this case, or that the forest income, which is the "income from the transfer of forest trees, was generated."

B)On the other hand, it is insufficient to view that the forest trees in this case were afforested (a separate road) or the afforestation period has elapsed for more than five years, only with the confirmation of the afforestation register for the forest in this case, there is no data on the afforestation in the forest in this case, and the Plaintiff has not reported and paid the forest income tax on the forest in this case during that period, and only with the certificate of afforestation No. 2 (a certificate of afforestation).

3.In conclusion

Thus, the plaintiff's claim of this case is dismissed for reasons.