Cho High Court Decision 2010Du3404 ( October 17, 2011)

It does not fall under farmland at the time of transfer and exclude capital gains tax reduction or exemption.

In light of the fact that land actually used for cultivation as of the date of transfer shall not be deemed farmland as of the date of transfer unless it is temporarily in a state of temporary suspension, and that land is used as a pet dog breeding house and a place of business collecting and selling waste resources, etc., it is insufficient to recognize it as farmland as of the date of transfer, and thus, a disposition excluding the reduction and exemption of capital gains tax

2011Gudan745 Disposition of revoking capital gains tax

XX

O Head of tax office

June 27, 2011

July 18, 2011

1. The plaintiff's claim is dismissed.

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

The imposition of capital gains tax of KRW 152,203,430 on the Plaintiff on October 1, 2010 shall be revoked.

1. Details of the disposition;

A. On June 23, 1973, the Plaintiff completed the registration of ownership transfer based on sale with respect to AAAdong 93-6 1,949 square meters (hereinafter “instant land”).

B. On December 15, 2009, the Plaintiff transferred the instant land to Cho Jae-A and one other, and applied the provision on reduction and exemption of capital gains tax for at least eight years by applying the transfer value to the Defendant as the transfer value of KRW 766,350,00, acquisition value of KRW 104,853,710.

C. The Defendant excluded capital gains tax reduction or exemption on the ground that the instant land was not farmland at the time of transfer, and imposed capital gains tax of KRW 152,203,430 on the Plaintiff on October 8, 2010 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 12, 2010, but was dismissed on February 17, 201.

[Reasons for Recognition] Facts without dispute Gap evidence No. 1.2 (including each number; hereinafter the same shall apply), Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The disposition of this case is unlawful, since the land of this case falls under the farmland which was in the absence of the present farmland at the time of transfer and is the farmland of which the plaintiff has been self-employed for not less than eight years.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) After acquiring the instant land on June 23, 1973, the Plaintiff continued to grow for more than 30 years and leased the instant land to Korea-B around March 2004, B used the instant land as a pet dog breeding house.

(2) The Plaintiff leased the instant land to the KCC around October 2007, and the KCC used the instant land as the place of business for collecting and selling waste resources until the end of November 2009.

(3) On May 22, 2009, the Plaintiff entered into a sales contract with ChoA et al. and one other on the instant land, and entered into a special agreement with the Plaintiff to return the present state to farmland before the land transaction permission was granted.

(4) According to the Land Transaction Permit issued on December 10, 2009 by the Namyang-ju Market, the legal category and reality of the land in this case is written as "the answer" or "the reality", and the purpose of its use is written as "agriculture".

(5) The instant land was in the state of loading various solid garbage, etc. in the site state at the time of the transfer, and it is difficult to enter as of July 21, 2010, the boundary rail network installed by the transferee is installed, and the land is de facto miscellaneous to the ground.

[Reasons for Recognition] The whole purport of each of the above evidences and evidence Nos. 2 through 5

D. Determination

(1) According to Article 69(1) of the Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010); Article 66(1), 4, and 5 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22583, Dec. 30, 2010); Article 27(1) of the Enforcement Rule of the same Act, in order to be subject to reduction and exemption of income tax on self-employed farmland, a transferor shall be recognized as having committed a minor act for at least eight years between the time of acquisition and the time of transfer from the time of acquisition while residing in the Si, Gun, Gu, or Si, Gun, Gu, or Gu, where the relevant land is located and used for real cultivation regardless of its land category on the public cadastral book as of the date of transfer; since the land which is not actually used for cultivation as of the date of temporary suspension, it cannot be deemed as farmland as of the date of transfer; and thus, it does not constitute the requirements for reduction and exemption (see, etc. 2.).

(2) In light of the following circumstances acknowledged in light of the purport of the entire pleadings, the Plaintiff’s lease of the instant land from March 2004 to November 2009, the instant land was used as a pet dog breeding place, waste resources collection and sale business place, the Plaintiff, around November 2009 according to the above sales contract, produced a lessee from the instant land and restored the land into farmland, and obtained land transaction permission on December 10, 2009, with the purpose of using the land for farming (agricultural) around December 10, 2009. The instant land was in the state of loading various kinds of objects, garbage, etc. in the state of site at the time of the transfer, and as of July 21, 2010, there were no evidence to acknowledge that the instant land falls under farmland as of the date of transfer. Therefore, the Plaintiff’s disposition is legitimate.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as there is no ground.