Busan High Court Decision 2017 Busan High Court Decision 2669 ( October 25, 2017)

Since it cannot be deemed that farmland was self-filled, it constitutes non-business land.

Since it is insufficient to recognize that he/she has been engaged in crops cultivation, etc. or 1/2 or more of the farming works have cultivated or cultivated with his/her own labor, it is reasonable to regard him/her as land for non-business under Article 104-

Scope of land for non-business under Article 104-3 of the Income Tax Act

2017Guhap2287 Revocation of Disposition of Imposing capital gains tax

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△△△ Director

8.01.19

8.02.09

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 108,502,970 for the year 2015 against the Plaintiff on October 16, 2016, which exceeds KRW 45,534,362, shall be revoked.

1. Details of the disposition;

A. On July 7, 2015, the Plaintiff transferred two parcels of real estate (hereinafter collectively referred to as “each of the instant real estate”) other than 564-1 square meters per annum 572-1, and 564-1,289 square meters per annum (hereinafter referred to as “second piece of real estate”) (hereinafter referred to as “each of the instant real estate”).

B. After transferring each of the instant real estate, the Plaintiff filed a special deduction for long-term holding pursuant to Article 95 of the former Income Tax Act (amended by Act No. 13558, Dec. 15, 2015; hereinafter the same shall apply) and Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter the same shall apply) with respect to the instant real estate, the Plaintiff filed a report on the special deduction for long-term holding under Article 95 of the former Income Tax Act (amended by Act No. 13558, Dec. 15, 2015; hereinafter the same shall apply) with respect to the instant real estate and the remaining real estate, subject to the special deduction for long-term holding under Article 95 of the former Income Tax Act for the transfer income tax

C. As a result of the investigation into capital gains tax on each of the instant real estate from July 7, 2016 to July 25, 2016, the Defendant excluded the Plaintiff from self-employed land reduction for at least eight (8) years on the ground that the Plaintiff’s annual amount of wage exceeds 37 million won under Article 66(14) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26959, Feb. 5, 2016; hereinafter the same). The Defendant excluded the portion of each of the instant real estate special deduction for at least 20 years on the ground that the Plaintiff did not meet the “self-employed land reduction or exemption for at least eight (8) years,” and excluded the portion of each of the instant real estate acquisition tax for at least 1,085 square meters among the instant real estate and the instant 2 real estate from each of the instant special deductions for non-business use under Article 104-3(1) of the former Income Tax Act (amended by Act No. 13426, Jul. 24, 2015).

D. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on December 26, 2016 and filed an appeal with the Tax Tribunal on May 10, 2017, but was dismissed on July 25, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1, 5 evidence, Eul evidence 1 to 7 (each number is included; 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, who acquired real estate Nos. 1 and 2 of this case, conducted the disposition of this case on the ground that the part excluded from the special long-term possession deduction of this case constitutes “non-business land” even though he/she re-developed for at least two years immediately before the date of the transfer of real estate No. 1 and 2 of this case or cultivated for himself/herself for at least 60% of the total holding period ( approximately 12 years and 4 months).

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Under Article 95 (1) and (2) of the former Income Tax Act, where the period of possession of land or building is not less than three years, the amount calculated by multiplying the gains from the transfer of the asset by the deduction rate by the holding period (hereinafter referred to as "long-term possession special deduction amount") shall be deducted from the land subject to the deduction, and Article 104-3 (1) of the former Income Tax Act provides that the land for non-business purposes is excluded from the land subject to the deduction, and the land for which the owner does not reside in the area or is not cultivated by himself/herself (hereinafter referred to as "farmland") for the period prescribed by Presidential Decree, as prescribed by Presidential Decree, or the land for which the owner does not reside in the area or is not cultivated by himself/herself for the same period as the land for non-business purposes (hereinafter referred to as "land for which the period exceeds 10 years prior to the transfer period of 20 years or more" (hereinafter the same shall apply) of the former Enforcement Decree of the Income Tax Act which was delegated by Presidential Decree of Article 104-3 (10 years prior to the transfer period).

On the other hand, Article 2, subparagraph 5 of the Farmland Act provides that "a farmer is engaged in cultivating crops or growing perennial plants on his own farmland or growing or growing not less than half of farming works with his own labor" shall be regarded as "a farmer's own land."

2) In light of the contents and purport of the aforementioned relevant Acts and subordinate statutes, we examine the following circumstances, which are acknowledged as being comprehensively based on the overall purport of Gap evidence evidence Nos. 2, 3, and 4 as to the instant case, namely, in the case of the real estate No. 1, the following circumstances, namely, (i) Gyeongnam Kim Sea among the instant real estate 】 face 】 571-1 】 even if some trees are planted, they appear to have been used for the purpose of gardening; and (ii) in the case of the instant real estate No. 2, the part (203.53 m2) was used as farmland, but it is difficult to view that the remaining part was used as farmland because it was used as farmland, and (iii) the Plaintiff acquired wage and salary income for a considerable period from around 207 to around 2015 from the sale of each of the instant real estate, as well as the Plaintiff’s assertion that each of the instant real estate was insufficient to recognize that the Plaintiff had been engaged in a long-term cultivation permit or sale of the instant real estate.

3. Conclusion

Therefore, the plaintiff's claim of this case is without merit, and it is decided as per Disposition with the decision of this case.