Changwon District Court 2009Guhap216 ( August 27, 2009)

National Tax Service Review and Transfer 2008-008 ( November 03, 2008)

corresponding to a self-fluent farmland for not less than eight years;

According to each photograph taken on the land, it is reasonable to view that the land was re-established and re-developed for not less than eight years, considering that it is reasonable to view it as farmland at the time of transfer, and that it was appraised as a result of appraisal commission that it was used as farmland for not less than 10 years. Therefore, the disposition excluding

209Nu570 Revocation of disposition of imposing capital gains tax

XX Kim

O Head of tax office

Changwon District Court Decision 2009Guhap216 Decided August 27, 2009

June 22, 2011

August 17, 2011

1. The part against the plaintiff falling under any of the following subparagraphs among the judgment of the court of first instance shall be revoked:

The Defendant’s imposition of capital gains tax of KRW 184,272,430 for the year 2006 against the Plaintiff on December 1, 2007, which exceeds KRW 73,582,443, shall be revoked.

2. The plaintiff's remaining appeal is dismissed.

3. Of the total litigation costs, 40% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

The judgment of the first instance shall be revoked. The disposition of imposition as prescribed in paragraph (1) shall be revoked.

1. Details of the disposition;

A. The Plaintiff’s father, KimA (the father of May 7, 2007, hereinafter “the deceased”) sold the instant land to the XX house Co., Ltd. (hereinafter “P house”), with the transfer value of the instant land KRW 217,000,000,000,000 for KRW 1,650,000,000 for the above-ground housing and KRW 1,650,000 for the above-mentioned land. However, around August 206, the deceased sold the instant land to the Defendant with the transfer value of KRW 30,757,328,00 for the transfer income tax for the year 2006.

C. The Plaintiff, the inheritor of the deceased, received a notice of payment of capital gains tax from the Defendant on November 6, 2007, and made a final return of capital gains tax on the condition that the land of this case was reduced or exempted as farmland for at least eight years. The Defendant: (a) deemed that the land of this case was not subject to capital gains tax reduction or exemption for at least eight years; and (b) deemed that the land of this case was not subject to capital gains tax reduction or exemption for at least eight years; and (c) the transfer value was divided in proportion to the price of the above land; and (d) issued a notice of correction of KRW 184,272,438 of capital gains tax for the taxable year of 2006 to the third party’s heir, including the Plaintiff on December 1, 2007.

E. The Plaintiff dissatisfied with the instant disposition and filed a request for examination with the Commissioner of the National Tax Service on January 22, 2008, but the request for examination was dismissed on November 3, 2008.

[Ground of recognition] Gap evidence 1, 3, Eul evidence 4-I, 2, Eul evidence 1-I, 2, and Eul evidence 1-3, Eul

Each entry of 14-1 through 3, 15-1, 2-2

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Since the instant land is farmland for at least eight years, capital gains tax should be reduced or exempted.

(2) Even if the land of this case does not fall under one’s own farmland for not less than eight years, since the period during which the land of this case was not re-established and self-developed during the three years immediately before the date of the transfer of the land of this case does not exceed one year, or since the consent was owned as farmland for not less than 20 years before December 31, 2006, the capital gains should be calculated according to the standard market price, not the actual transaction value.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

(1) On December 30, 1974, the Deceased purchased the instant land on December 30, 1974 and completed the registration of transfer of rights in his name on December 31, 1974.

(2) On December 27, 1975, the deceased went to a company with a 000 head of XX), who is adjacent to the instant land, and resided in the instant house for at least 30 years until he/she moves to a Ori in the XX City on September 26, 2006. On March 1, 1970, the deceased was serving as an agricultural engineer on March 1, 1970, and served in the XX middle school until the head of general affairs division retires from the retirement age.

(3) On a private records card drawn up around March 1971 as a public official with respect to the Deceased, the deceased’s peculiar skill and father work are indicated as “diversity,” and the monthly income of 5,000 won. The Deceased was a member of the XX agricultural cooperative from July 8, 1971 to June 29, 2007.

(4) In the daybook prepared by the Deceased in 191, "Scambling, scamling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, tree cells, grass-cambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, scambling, etc." in the first half of 201, the content of "scambling, etc." is written in the first half of 204.

(5) According to the aerial photography taken in 1975, September 1982, October 1987, May 1993, January 1997, November 2001, and March 2005, the land of this case was used as dry field in 1975, most of the land used in 1982 and 1987, and was used as dry field in 193 and 1997, and some of the trees were planted in 2001, and was used as dry field in March 2005.

(6) According to the aerial photography taken around May 2005 or the photographs taken around July 12, 2005 at the time of appraisal and assessment, the remaining parts of the instant land are planted with small trees, and the large trees are planted on the boundary part of the instant land. There are three buildings adjacent to the instant land, namely, at the XX City 000, there are three buildings. Among them, there are large numbers of trees around the instant housing, which are the buildings.

(7) 이 사건 토지에 대한 토양성분 분석결과, 전체 면적에서 밭농사 기준에 적합한 인산(憐醒, phosphoric acid) 등이 검출되었는데, 인산의 축적정도(l,119mg/kg)로 추산한 경작기간은 최소 10년 이상으로 밝혀졌다.

(8) During the period from December 7, 1987 to August 10, 1994, and from July 1, 2001 to January 20, 2002, the Dogar's deceptive act was in contact with the land of this case and engaged in a new sales business by making the XX 0000 of the Dog-si as the place of business.

(9) XX viewing was based on the current status of the instant land as a site and imposed a property tax in 2005 and 2006. On November 2007, at the Plaintiff’s request, the current status of the instant land was corrected as farmland and refunded the difference between the property tax in 2005 and the property tax in 2006 imposed as a site.

(10) From 2004 to 2006, Kim Young-line, who was living in the deceased’s house, was on January 23, 2008.

The defendant prepared and sent to the defendant's employee a confirmation letter stating "the landscape trees were planted in most of the land of this case, and some of them were used as a garden", and on May 14, 2009, a confirmation letter stating that "the contents of the confirmation document prepared by the defendant to the employee of the defendant are wrong and that the land of this case was used as a dry field, and that it is memory that it was used as a dry field."

(11) Around December 2007, ten neighboring residents of the instant land prepared a letter of guarantee that “the deceased cultivated crops on the instant land from around 1975 to around 2006 until the time of transfer of the instant land.”

(12) On November 24, 2005, the Deceased sold 1,450,000 won in total to the land of this case, the above 1265 large 77 square meters and the above 1,450,000 won for each land, and the OOsungwon Co., Ltd. (hereinafter referred to as the “OOsung”), while participating in the contract at the XX Housing Office, the deceased agreed to pay 1,305,000 won for the contract date, the remainder 1,305,000,000 won for the contract date, and the fixed number of obstacles is excluded from the list of the deceased’s ownership.

(13) On July 13, 2006, the deceased changed and confirmed the above purchase price to KRW 1,650,000,000, and the remaining payment date to July 13, 2006, and entered into a sales contract with the above purchase price to KRW 217,00,000,000, out of the above purchase price.

(14) On the other hand, on July 13, 2006, the deceased drafted a sales contract on November 24, 2005, with the price of the above-mentioned 1265 large 77 square meters and the price of the above-mentioned above-mentioned 1,43,00,000 won.

(15) On August 31, 2006, the Deceased reported the tax base of transfer of the instant land to the Defendant on August 31, 2006, and reported the transfer value to KRW 217,00,000,00, and the acquisition value to KRW 30,194,156, both Do income amounting to KRW 129,930,023, and did not report the reduction or exemption income, kinds, reduction or exemption rate, etc.

(16) On May 6, 2007, the Defendant made a final return of transfer income tax on the ground that “The transfer value of the instant land falls short of the market price and the standard market price at the time of transfer,” and that “the Plaintiff was aware of this fact, on November 6, 2007, 300,542,000 based on the standard market price through ParkB, a tax agent business agent, calculated the transfer value at KRW 39,717,560 based on the standard market price; while calculating the transfer value at KRW 181,743,040 based on the acquisition value at KRW 39,717,560, the Defendant made a final return of transfer income tax on the ground that “the instant land constitutes self-farmland for at least eight years.”

(17) In accordance with Article 166(6) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008), the Defendant issued the instant disposition to the Plaintiff on December 1, 2007, after correcting the transfer price of the instant land as KRW 785,708,406, the amount of the transfer price of the instant land was KRW 777 square meters, and the transfer price of the instant land was KRW 864,291,594.

(18) The transfer margin based on the standard market price of the instant land is KRW 244,53,914.

[Ground of recognition] Gap evidence 1, 3, Eul evidence 1, 4-1, 2, 5-1 through 3, Gap evidence 6-1, 7-1, 8-1, 8-2, Gap evidence 10, Gap evidence 11-1, 2, Gap evidence 13, Gap evidence 14-1 through 6, Gap evidence 15, 16, 18-1, Eul evidence 18-1 through 3, Eul evidence 2, 4, 5, 8, 9, 12, Eul evidence 13, 14-1, 15-1, 15-2, 15-1, 2-1, 15-1, 2-1, 2-1, 3-1, 15-2, 3-1, 2-1, 2-1, 3-1, and 3-2-1, 3-1, 2-1, 2-2, 3-1,

D. Determination

(1) Whether the deceased had re-established and re-developed the land of this case for at least eight years

(A) Relevant statutes

According to Article 69(1) of the Restriction of Special Taxation Act (amended by Act No. 8827 of Dec. 31, 2007) and Article 66(1) and (12) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 20620 of Feb. 22, 2008), if a person who resides in a location of farmland (an area in a Si/Gun/Gu where farmland is located or an area in a Si/Gun/Gu adjacent thereto) for at least eight years has cultivated farmland directly for at least eight years and transfers the farmland, capital gains tax shall be reduced or exempted.

(B) Relevant legal principles

1) The fact that the transferor of the transferred land must actively prove it, and the fact that the transferred land has been used as farmland for not less than eight years is recognized, and thus, it is not presumed that the transferor is a person who claims it (see, e.g., Supreme Court Decision 94Nu996, Oct. 21, 1994).

“2) The self-fluence of farmland does not mean only a person’s own rice and dry paddy field, but also a person’s own rice paddy field and dry dry field and dry paddy field are not a “self-fluence” under one’s own account and responsibility (see, e.g., Supreme Court Decision 90Nu639, May 22, 1990). “3) If a farmland owner had another occupation and has resided in a place other than his/her own land and has cultivated it by employing another person under his/her responsibility and calculation, the land falls under one’s own farmland (see, e.g., Supreme Court Decision 90Nu6064, Sept. 28, 190).

4) The cultivation of crops on a part of land, the main purpose of which is clear that the entire land is a site, is limited to the temporary use of land to the extent that does not interfere with its main purpose, and does not constitute so-called self-arable land exempt from capital gains tax by specifying only the above cultivation part (see Supreme Court Decision 95Nu9709, Nov. 14, 1995).

5) In determining whether farmland is exempt from capital gains tax for not less than eight years, even if the public record is farmland, the land which is 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 by the landowner’s own person or by another person or is temporarily in a state of temporary closure, and thus does not constitute land subject to exemption from capital gains tax (see, e.g., Supreme Court Decision 97Nu706, Sept. 22, 1998).

(C) Determination

6. According to the above legal principles, since the land of this case was used as dry field around September 1982 and was mainly used for cultivating crops or perennial plants, such as vegetables at the time of transfer. Thus, it is reasonable to view the land of this case as farmland at the time of transfer. ② Since the land of this case was transferred, large trees were planted above the boundary of this case, and the building site of this case was part of the land of this case was not different from the present condition of the land of this case. ③ From 1975, the view that the land of this case was no longer than 7 years old, 196, 200, 206, 3.5.7 years old, 206, 4 years old, 206, 7 years old, 4 years old, 5 years old, 5 years old, 196.7 years old, 7 years old, 200.

(2) The due amount of tax

(A) Relevant statutes

1) Article 96 (1) of the Income Tax Act (amended by Act No. 8825 of Dec. 31, 2007) provides that "the transfer value of assets under each subparagraph of Article 94 (1) shall be the actual transaction value between the transferor and the transferee at the time of transfer of the relevant assets (hereinafter "actual transaction value")". Paragraph (2) provides that "in case where the assets under Article 94 (1) 1 and 2 are transferred not later than December 31, 2006, the transfer value of the assets shall be the standard market value at the time of transfer of the relevant assets except for the cases falling under any of the following subparagraphs:

2) Article 114 (2) of the same Act provides that if any omission or error is found in the details of a return filed by a person who has made a preliminary return under Article 105 or a person who has made a final return under Article 110, the chief of the district tax office or the director of the regional tax office having jurisdiction over the place of tax payment shall correct the transfer income and the tax amount, and Paragraph (4) of the same Article provides that "in case where the chief of the district tax office having jurisdiction over the place of tax payment or the director of the regional tax office determines or revises the transfer income and the tax amount under paragraphs (1) through (3), it shall be based on the value under Articles 96 and 97," and Paragraph (6) of the same Article provides that "in case where the provisions of paragraph (4) are applied, the transfer income and the tax amount are reported based on the actual transaction

3) Article 162-2(2) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008) provides that the case where the transfer value of assets is based on the actual transaction amount pursuant to Article 96(2)5 of the Act means the case where real estate is acquired or transferred by unlawful means, such as preparation of a false contract, false transfer of resident registration, etc., and the case falling under any of the following subparagraphs of a multi-Eup. 5 transaction.

4) Article 133(1) of the Restriction of Special Taxation Act (amended by Act No. 8827 of Dec. 31, 2007) provides that “Where the total amount of capital gains tax to be reduced or exempted for an individual under Articles 33, 34, 41, 43, 69, 70, and 77 of this Act or Article 29 of the Addenda of this Act exceeds KRW 100 million by taxable period, the amount equivalent to the excessive portion shall not be reduced or exempted.”

(B) Determination

(4) As to the legitimate amount of capital gains tax on the land of this case, ① on November 24, 2005, the deceased’s land of this case of this case of this case of this case of this case of 1,450,00 won in a lump sum of 1,40,00 won and 200 won under the proviso of Article 4 of the Income Tax Act of this case of 1,650,000 won and 200 won for 30 years of transfer income tax of this case of this case of this case of this case of 40,000 won and 200 won for 30 years of transfer income tax of this case of this case of this case of this case of 40,000 won and 40, 70,000 won of land of this case of this case of this case of this case of this case of 20, 30,000 won of transfer income tax of this case of this case of this case of this case of this case of 40, 70, 207,07,

3. Conclusion

Therefore, the part of the disposition of this case, which exceeds 73,582,443 won, which is the legitimate tax amount recognized above, shall be revoked. Thus, the plaintiff's claim of this case shall be accepted within the scope of the above recognition, and the remainder of the plaintiff's claim shall be dismissed as it is without merit. Thus, the judgment of the court of first instance shall be partially accepted the defendant's appeal because it is unfair to conclude this conclusion, and the part of the disposition of this case against the plaintiff in excess of 73,582,443 won among the judgment of the court of first instance shall be revoked, and this part of the disposition of this case shall be revoked, and the remaining appeal