[1] Whether the land which was not used for cultivation as of the date of transfer as self-arable farmland for not less than eight years but is in a state of temporary closure constitutes farmland subject to non-taxation of capital gains tax under Article 5 subparagraph 6 (d) of the former Income Tax Act (affirmative)

[2] The case holding that where farmland which has been self-employed for not less than eight years was illegally occupied by the migrants at the time of transfer to a temporary management neglect, and was not used as farmland, it shall be deemed that there was a temporary suspension state, and it constitutes farmland subject to non-taxation of capital gains tax

[1] In determining whether farmland is exempt from capital gains tax for at least eight years under Article 5 subparagraph 6 (d) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993), the land category in the public record as of the date of transfer, even if farmland is farmland, shall not be deemed farmland as of the date of transfer, unless the land category in the public record is farmland actually used for farming as of the date of transfer, or is in the temporary state of closure, and it shall not be deemed as farmland as of the date of transfer, unless the land category in the public record is farmland by the landowner, or by another person, or is temporarily in the state of temporary closure. However, in light of various circumstances, if it is deemed that the cause of such a defect is removed, it shall be deemed that it is temporary closure, and if it is transferred under such condition, it shall be deemed that it is a transfer of farmland.

[2] The case holding that where farmland which has been self-employed for not less than eight years was illegally occupied by the migrants at the time of transfer to a temporary management neglect, and was not used as farmland, it shall be deemed that it was in a state of temporary suspension, and it constitutes farmland subject to non-taxation of capital gains tax

[1] Article 5 subparagraph 6 (d) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993) (see current Article 55 (1) of the Regulation of Tax Reduction and Exemption Act), Article 14 (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14083 of Dec. 31, 1993) / [2] Article 5 subparagraph 6 (d) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993) (see current Article 5 (1) of the Regulation of Tax Reduction and Exemption Act), Article 14 (3) of the former Income Tax Act (amended by Presidential Decree No. 14083 of Dec. 31, 1993)

[1] Supreme Court Decision 89Nu664 delivered on February 13, 1990 (Gong1990, 683) Supreme Court Decision 91Nu742 delivered on November 12, 1991 (Gong1992, 150)

[Judgment of the court below]

Head of the Tax Office

Seoul High Court Decision 95Gu21053 delivered on November 29, 1996

The appeal is dismissed. The costs of appeal are assessed against the defendant. Of the judgment of the court below, the defendant's "the head of Seocho Tax Office" shall be corrected to the "the head of Gyeyang Tax Office

The grounds of appeal are examined.

In determining whether farmland is exempt from capital gains tax for at least eight years as prescribed in subparagraph 6 (d) of Article 5 of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993), even if land on the public record is farmland, land not actually used for farming as of the date of transfer shall not be deemed farmland as of the date of transfer, unless it is determined by the landowner's own or by another person, or is temporarily in a state of temporary closure, and thus, it shall not be deemed that it does not constitute farmland as of the date of transfer (see, e.g., Supreme Court Decisions 89Nu664, Feb. 13, 1990; 91Nu7422, Nov. 12, 191).

However, in light of various circumstances, if the cause of such a trouble is removed, it should be viewed as a temporary suspension of farmland if it is deemed that it could have been used as farmland at all times, and if it is transferred under such a condition of suspension of farmland, it should be viewed as a transfer of farmland.

According to the reasoning of the judgment of the court below, the land of this case was cultivated as farmland for not less than 8 years by the plaintiff, and it was occupied by illegal migrants due to temporary management negligence, and tried to leave and remove the land by using a large number of removal service teams and the police, etc. as stated in the judgment of the court below. However, according to the above facts, although the illegal occupancy part of the above residents at the time of transfer of each of the land of this case was not actually used as farmland, it was due to the fact that the residents were forced to enter into the apartment house in order to obtain the right to move into the apartment house in accordance with the implementation of the housing site development project of the above Korea National Housing Corporation, and the illegal occupancy part of the above relocated residents in each of the land of this case was not based on the intention of the plaintiff or its tenant, and it was inevitable to leave the above residents until they move out, considering these special circumstances, it should be determined that the whole land of this case was determined as farmland at the time of transfer.

In light of the records, the above fact-finding and decision of the court below is correct, and there is no error of misconception of facts, omission of judgment, or incomplete hearing due to the violation of the rules of evidence.

The grounds of appeal cannot be accepted.

However, inasmuch as the administrative affairs of this case were transferred to the Yang Jae-man, which was promulgated by the Presidential Decree No. 15036, Jun. 29, 1996, by the National Tax Service and its affiliated agencies under the Decree No. 15036, it was decided to revise the Defendant’s indication as ordered in the judgment below.

Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Seo Sung-sung (Presiding Justice)