Cho Jae-2014-China344 ( October 06, 2014)

No evidence that he/she did not fall under farmland at the time of the date of transfer, and that he/she did not have self-defense shall not be deemed to have

There is no basis to regard that the farmland is not farmland at the time of the transfer date, and even if the farmland is farmland of a novel, there is no basis to regard that the farmland was actually cultivated

Article 70 of the Restriction of Special Taxation Act for Substitute Land for Farmland

2014Gudan485 Revocation of Disposition of Imposing capital gains tax

friendly ○

○ Head of tax office

2016.03.16

2016.04.27

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 KRW 131,502,640 against the Plaintiff on January 15, 2014 is revoked.

1. Details of the disposition;

A. On July 25, 2005, the Plaintiff acquired and owned a total of 7,141 square meters of three parcels, including 00 0,031 square meters in ○○○○○○○ 00 square meters (hereinafter “instant land”); 1,073 square meters in 00,073 square meters in 00, and 37 square meters in 00,000 square meters in 1.6 billion won in 1.6 billion won in 28, 2012. Meanwhile, the Plaintiff purchased and completed the registration of transfer of ownership on December 13, 201, 201.

B. Upon reporting the transfer income tax on the instant land, the Plaintiff reported and paid KRW 250 million on July 31, 2013, by applying the provisions on capital gains tax reduction and exemption by farmland substitute land under Article 70 of the Restriction of Special Taxation Act to 99 square meters among the instant land at issue.

C. The Defendant: (a) conducted a survey on capital gains tax on the Plaintiff; (b) denied the application of reduction or exemption of capital gains tax on 99 square meters among the instant land; (c) deemed that 5,311 square meters, excluding the building and appurtenant land, among the instant transfer land, constituted non-business land; and (d) excluded the special long-term holding deduction; and (c) rendered the instant disposition with the purport of correcting and notifying the Plaintiff of KRW 131,502,640 for capital gains tax reverted to the year 2012.

D. On June 13, 2014, the Plaintiff filed an objection and filed an appeal with the Tax Tribunal, but was dismissed on October 6, 2014.

[Ground of recognition] No dispute, Gap evidence 1 to 4, Gap evidence 21, Eul evidence 1 to 4, and the whole purport of pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) After acquiring the instant land as forest land, the Plaintiff cultivated agricultural crops from around February 2008 to around 99 square meters each year, and entered into a sales contract on the instant land with HongB (Representative Director of ○○ Construction Co., Ltd.) on February 20, 2012, the Plaintiff, at the request of HongB, prepared a sales contract on May 25, 2012, which was made the purchaser’s name the said company employees Park Jae-A, and completed the registration of ownership transfer to Park Jong-A on June 28, 2012. In this case, since the purchaser of the instant land prior to the transfer date in accordance with the terms and conditions of the sales contract, the Plaintiff had to determine whether farmland was farmland as of February 20, 201, which is the date of actual contract. The instant land at the time was farmland, and the Plaintiff met the requirements for direct reduction and exemption of farmland for at least three years from March 208 to December 20, 2012.

2) If the contract date of the instant transfer land is deemed to be May 25, 2012, and thus does not fall under the requirements for reduction and exemption of farmland in lieu of farmland, even if the Plaintiff did not fall under the requirements for reduction and exemption of farmland in the same time, insofar as the Plaintiff was limited to the land in question for about four years from March 2008 to February 2, 2012, as long as it was smaller than 1,925 square meters out of the key land in this case for about four years from around 208 to around 2012, it constitutes the land directly cultivated for three

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) Relevant legal principles

Article 70(1) of the former Restriction of Special Taxation Act (amended by Act No. 11614, Jan. 1, 2013; hereinafter the same) provides that the amount of tax equivalent to 100/100 of the capital gains tax shall be reduced on the income accruing from the substitute soil as farmland prescribed by Presidential Decree for the purpose of farming the land directly cultivated by a resident prescribed by Presidential Decree residing in the seat of the farmland, which is subject to agricultural income tax, and Article 67(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24368, Feb. 15, 2013; hereinafter the same) provides that the term "direct farming" in Article 70(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 24368, Feb. 15, 2013) means that a resident is constantly engaged in cultivating the agricultural products or growing perennial plants on his/her own farmland

Meanwhile, according to Article 66(5) of the former Enforcement Decree of the Restriction of Special Taxation Act and Article 27(1) of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Strategy and Finance No. 406, Mar. 14, 2014); and Article 162(1) of the Enforcement Decree of the Income Tax Act, land subject to reduction and exemption from farmland shall be farmland as of the date of transfer; however, if the purchaser changes the form and quality of land and starts construction in accordance with the terms and conditions of the sales contract before the date of transfer, whether the land is farmland shall be determined as of the date of the sales contract; and such farmland shall be interpreted as the land actually used for farming regardless of its land category in the public register as a rice and paddy field. In addition, the term "direct farming" as referred to in the above provision means cultivating or cultivating at least 1/2 of the farming work with its own labor. The meaning of "one-half or more self-help labor force" shall be interpreted as meaning as meaning a sentence (see, 201).

Furthermore, the burden of proving that the land subject to reduction or exemption of capital gains tax is "farmland" and "self-defluence" is a taxpayer who claims reduction or exemption of capital gains tax.

2) The transfer date of the pertinent land and whether it constitutes farmland

A) As seen earlier, land subject to reduction and exemption from farmland shall be farmland as of the date of transfer, and where a purchaser changes the form and quality of land and starts construction in accordance with the terms and conditions of a sales contract before the date of transfer, whether farmland is farmland shall be determined

In addition, in cases where a certain content of a contract is prepared in writing, as a disposal document, if the objective meaning of the text is clear, barring special circumstances, the existence of the expression of intent and its content should be recognized. In particular, in cases where a significant impact on the legal relationship between the parties is caused by interpreting differently from the objective meaning of the text, the more strict interpretation of the text should be made (see, e.g., Supreme Court Decision 2010Da26769, Nov. 11, 2010).

B) In full view of the following facts: (a) there is no dispute between the parties to the instant case or (b) No. 5, 6, and 16 to 18 B; (b) the Plaintiff concluded a sales contract on February 20, 2012 with RedB (the representative director of North General Construction Company) and the transfer of the instant land; (c) the Plaintiff prepared a sales contract (Evidence No. 5) as of February 20, 2012; (d) KRW 1.6 billion for the remainder of KRW 1.6 billion for the Plaintiff at the time of the said contract to pay the remainder of KRW 1.6 billion to the Plaintiff at KRW 1.6 billion to the Plaintiff at KRW 6 billion; and (e) RedB, KRW 1.6 billion,000,000,000,000,000,000,000,0000,000 won, which was paid to the Plaintiff at the time of the transfer of the instant contract; and (e) pursuant to the agreement that agreement, the Plaintiff would not immediately pay the remainder to the said contract to the Plaintiff.

In light of the aforementioned facts in light of the legal principles as seen earlier, it is reasonable to interpret that the first sale contract between the Plaintiff and RedB with respect to the land transferred including the instant disputed land was lawfully cancelled or terminated according to mutual agreement in light of the flow of money exchanged between the two parties by passbook, etc. or the objective contents of the disposal documents, such as sales contract and receipts prepared in their names, etc., and it is reasonable to interpret that the remainder of the land transferred and the registration of transfer was completed according to the sales contract dated May 25, 2012 (excluding whether the actual purchaser is RedB or ParkB) concluded between the Plaintiff and Park Jong-A on May 25, 2012. Accordingly, as a matter of principle, the transfer date of the instant land should be deemed as June 28, 2012, which is the remainder of the settlement date, but as long as the purchaser had already changed the form and quality of the land in accordance with the implied terms and conditions of the sale contract before that date, it cannot be deemed that the farmland was subject to reduction or exemption as of the present farmland.

C) Unlike the Plaintiff’s assertion, even if the transfer date of the instant land was recognized as the date of February 20, 2012, according to the entries in evidence Nos. 8 through 19 (including various numbers), the images of evidence No. 25, the court’s fact-finding inquiry results on the O pages and O markets, and witness Park Jong-A’s testimony on or around September 2010, the fact that dry field plants were planted in part of the instant land was planted on or around September 201; the fact that, even on or around September 2011, the crops, such as beer and shack were planted on the part of the instant land; the fact that 5,544С, which is part of the instant land’s issues, were registered as farmland on the farmland ledger prepared in 2011, but it is not deemed that the aforementioned evidence alone was not sufficient to conclude that there was evidence No. 4, 5, 15, 2010 through 20, the overall statement of evidence No. 12, and evidence No.

According to the aerial photography taken from around September 2006 to April 2012 with respect to the land of this case, the forest area gradually decreased from around 2006 to around 2008, and around August 10, 2009 and around April 5, 2011, it is confirmed that it is a site status. A building is constructed on part of the land of this case and around September 2010, the surrounding land including the land of this case is being developed as various construction works.

The Plaintiff asserts that the aerial photography taken around August 10, 2009 does not seem to have agricultural crops due to the fact that it was the reason for agricultural crops as a concentrated rain at the time. However, even according to the entry of the evidence No. 8, the area lost as a concentrated rain at the time is less than 200 square meters, which is an extremely part of the key land of this case (6,031 square meters), compared with other nearby cultivated land as shown in the aerial railway, the Plaintiff’s assertion cannot be accepted as it is, in light of the following circumstances: (a) in comparison with the surrounding cultivated land as shown in the aerial railway, there is no trace of cultivation over the main land; (b) from March 2009, in light of the fact that the various civil works were carried out on from March 209

○ On July 23, 2010, the Plaintiff changed the category of the instant land from forest to miscellaneous land to miscellaneous land, and obtained approval for use from ○○○ City for excreta and waste disposal facilities (water in solid form) but did not use it for business purposes on June 4, 2012, changed the use of land for factory again on June 28, 2012, and transferred the instant land to YA on June 28, 2012. The Plaintiff’s behavior is against the assertion that the instant land was utilized as farmland.

○○ also recognized that, from March 2009 to the time of the transfer of the instant transferred land, the Plaintiff performed various civil construction works, such as development of groundwater or site creation, etc. by leasing various heavy machinery to the instant key land and its neighboring land, or newly constructing neighborhood living facilities on that ground.

3) Whether the plaintiff was self-incompetent

Even if the pertinent land constitutes farmland, it is insufficient to recognize that the Plaintiff directly cultivated the pertinent land for not less than three years, and there is no other evidence to acknowledge this differently, in full view of the following facts and circumstances acknowledged by the legal principles as seen earlier and the purport of the entry in No. 6 and the entire pleadings, based on the following facts and circumstances, based on the entries in No. 12, 18, and 19 (including each number), submitted by the Plaintiff, and the testimony of Park Jong-A by the witness.

Even according to the Plaintiff’s assertion, the place, area, and crops were cultivated in part of the instant land at different levels according to the circumstances each year. However, the Plaintiff’s assertion that the area of the instant land is 99mm2 as it did not specify the actual farming portion, which is the instant land, cannot be easily understood, and there are no objective grounds and materials for such assertion.

○ The Plaintiff did not submit evidence related to the purchase of seeds necessary for growing dry field crops, such as bean and shoulder, from the key land of this case, or documents relating to the sales places or distribution places of crops harvested or harvested.

○ The Plaintiff was registered as the representative of ○ Civil Engineering Design Corporation from February 1, 1998 to the time of the transfer of the instant key land. From February 1, 1998 to the time of the transfer of the instant key land, there was a revenue of KRW 10,50,000,000, which is less than rent, civil engineering design cost, etc. from 2008 to 2012.

As recognized earlier, it is difficult to view that the cultivation period is not less than three years since there was no objective data to verify that dry field crops, such as Congo and shoulder, were planted in part of the instant land around September 2010 or around September 201, and that the Plaintiff cultivated the instant crops directly. However, even if the Plaintiff cultivated the instant crops directly, it is difficult to deem that there was no objective data to verify that the farming was conducted on the instant land at the time before and after the excluding the said temporary date.

4) Whether the special long-term holding deduction is applied

As acknowledged earlier, it cannot be deemed that the instant land was farmland subject to reduction and exemption from farmland as of the date of transfer, and it is difficult to recognize that the Plaintiff cultivated the said land directly for three or more years. As such, the Plaintiff’s assertion that the instant land constitutes land for business as farmland directly cultivated for three or more years immediately before the date of transfer under the premise that the Plaintiff had cultivated the said land for four or more years from the 1,925 square meters of the instant land among the instant land, and thus, the special long-term possession deduction should be granted, without any reason to further examine it (the Defendant, as a witness, deemed that the forest land was maintained from 2005 to 2008 on the ground that the land category of the instant land was originally woodland, and thus, it was considered that the land was used as necessary expenses, such as the airline and civil works, etc., after the year 209, and that the Plaintiff transferred the land category to miscellaneous land and transferred it to the land for business use without using it as a temporary site for business use.

5) Sub-committee

After all, the plaintiff's argument cannot be accepted, and the defendant's disposition of this case is legitimate.

3. Conclusion

The plaintiff's claim is dismissed. It is so decided as per Disposition.