Cho High 201-Gu1977 ( November 09, 2011)

No one shall be deemed to have cultivated a substitute farmland into more than 1/2 of its own labor force.

In light of the fact that the transferor of substitute farmland received rice direct payments for the reason that he actually cultivated farmland even after the transfer of farmland, the farmer in the farmland ledger is a third party and purchased seedlings and fertilizers in the name of a third party, and served as the representative director of the corporation during the period of claiming that he/she was self-employed, it is difficult to deem that he/she directly cultivated substitute farmland.

Article 70 of the Restriction of Special Taxation Act

2012Guhap326 Revocation of Disposition of Imposing capital gains tax

Republic of Korea, Japan and one other

Kim head of the tax office

May 23, 2012

June 27, 2012

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The Defendant’s disposition imposing KRW 000 on Plaintiff A on March 8, 2011 and imposing capital gains tax of KRW 000 on Plaintiff KimA for the year 2007 shall be revoked in entirety.

1. Details of the disposition;

A. On January 10, 2004, Plaintiff Leecheon-si purchased 10/12 shares out of 00-0 m2, Kimcheon-si, Kimcheon-si, 000-0 m2, and received the remainder of the above land on February 5, 2004, and on May 4, 2004, Plaintiff Lee Jong-si donated 1,960 m2,000 m2,000 m2,000 m2,007 m2,000 m2 (hereinafter above m2,00,000 m2,000 m2,00 m2,00 m2,00 m2,000 m2,000 m2,00 m2,000 m2,000 m2,00 m3,000 m2,000 m2,00

B. On June 29, 2004, the Plaintiff Kim A (the mother of the Plaintiff) purchased an O 000-0 square meters prior to 000-0, and a 337 square meters prior to 000,0000 square meters prior to 00,000 (hereinafter collectively referred to as “the 2 previous farmland”). On September 17, 2007, the Plaintiff KimA sold the 2 previous farmland to the Korea Land Corporation, and on November 12, 2007, acquired an O 000 square meters prior to 000,018 square meters (hereinafter referred to as “the 2 substitute farmland”).

C. The Plaintiffs, at the time of filing a final return on capital gains tax for the previous farmland Nos. 1 and 2, applied for reduction or exemption of income tax on the ground that it is a substitute land for farmland under Article 70 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter “former Restriction of Special Taxation Act”).

D. On March 8, 2011, the Defendant deemed that the Plaintiffs did not own land for three years, and excluded the application of the capital gains tax reduction and exemption provisions. On March 8, 201, the Defendant issued a correction and notification of each disposition of KRW 000 of the capital gains tax for the transfer income tax of 2007 and KRW 000 of the capital gains tax for the transfer income tax of 2007 to the Plaintiff KimA (hereinafter collectively referred to as the “instant disposition”).

E. On May 23, 2011, the Plaintiffs filed an appeal with the Tax Tribunal on May 23, 201, but was dismissed on November 9, 201.

2. The parties' assertion

A. The plaintiffs' assertion is as follows.

The Plaintiffs acquired the instant farmland Nos. 1 and 2 within 2 years from the date of transfer of the previous farmland, and cultivated the instant farmland directly by planting tree, bamboo trees, and bamboo seedlings on the instant land Nos. 1 and 2. Therefore, the income from the transfer of the instant farmland is subject to reduction of capital gains tax due to the own farmland substitute land pursuant to Article 70 of the former Restriction of Special Taxation Act, notwithstanding the reduction or exemption of capital gains tax due to the own farmland substitute land pursuant to Article 70 of the former Restriction of Special Taxation Act, the instant disposition on a different premise shall be revoked as unlawful.

B. The defendant's assertion is as follows.

The plaintiff Lee Dong-A did not reside at the seat of the first farmland of this case, and the plaintiffs did not directly own the farmland of this case 1 and 2, so the disposition of this case is lawful.

3. Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

4. Determination

A. According to Article 70(1) of the former Restriction of Special Taxation Act and Article 67(1), (2), and (3)1 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22037, Feb. 18, 2010; hereinafter the same), where a person who has resided in the previous location of farmland for at least three years and cultivated another farmland while residing in the new location of farmland for at least three years within one year from the date of transfer of the previous farmland (or two years in cases of expropriation under consultation, expropriation, and other Acts pursuant to “Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor, two years in cases of expropriation). Where the area of newly acquired farmland is at least 1/2 of the area of farmland to be transferred, or the value thereof is at least 1/3 of the value of the farmland to be transferred, the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted.

The purport that no capital gains tax shall be imposed on farmland substituted for the necessity of cultivation is to protect farmers by allowing and guaranteeing free substitution of farmland, thereby promoting the development and encouragement of agriculture. Therefore, the previous land and new acquired land shall be farmland, and at the time of transfer of the previous land, the transferor shall be a person cultivating the land, and at the time of transfer of the previous land, a new land shall be acquired for the purpose of self-defense (see, e.g., Supreme Court Decision 95Nu3695, Sept. 29, 195). In such cases, as long as a person directly engaged in farming concurrently engages in other occupation, even if he/she concurrently engages in other occupation, it shall not be deemed that it constitutes an indirect management of agriculture with a view to other occupation (see, e.g., Supreme Court Decision 2002Du8444, Oct. 11, 2002).

(b) Fact of recognition;

(1) The land of this case Nos. 1 and 2 is located away from Kimcheon-si, Kimcheon-si, Kimcheon-si, the domicile of the plaintiffs, to approximately 28 km, and about 34 minutes are required when moving to a vehicle. The farmland ledger (Evidence A No. 8) states that farmers cultivating the land of this case Nos. 1 and 2 are Lee Dong-B (the father of this case and the husband of the plaintiff Kim AA). While the land category of the first and second land of this case is "the answer entered in the public register" on May 7, 2012, the land of this case was 6 pactine trees, 15 pactine trees, and 17 pactine trees are planted, and the land of this case Nos. 2 and the land of this case were 3 pactine trees.

(2) On April 4, 1963, DaD acquired the land of the instant substitute farmland and the land of the instant substitute farmland on September 29, 1980, respectively, and sold on July 19, 2005 the land of the instant substitute farmland to EE on July 19, 2005. EE sold on November 12, 2007, the land of the instant substitute farmland to EA, and on the same day, the land of the instant substitute farmland to the Plaintiff KimA.

(3) Even after selling 1,205 to 2009 of the instant farmland, Han-do received subsidies for rice production for the 1,2, and rice production for the 1,2009. DaD continued to be sold after December 10, 2010, and had not been paid by the real estate broker for free cultivation (Evidence 2). Han-do sold the 1,2, and the 1,2005 to 2,000 to 2,000, and submitted to the Defendant’s employee a confirmation document (Evidence 2) that had not been prepared and sold to the Plaintiffs on November 1, 2007, after having sold the 1,2005 to 1,2005 to 207. DaD sold the 1,2005 to 1,2005 to 207.

(4) On March 15, 2008, the FF prepared with the retroactive date for the purchase of seedlings and the statement of transaction related to the purchase of seedlings dated March 15, 2008 (Evidence No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-1, No. 2-2, and No. 3-2, No. 2-1, 2-1, No. 3-2, and No. 3-2-1, 2-2.

(5) Meanwhile, from March 5, 2008 to April 25, 2009, the Plaintiff served as the representative director of the FF Development Corporation located in Daegu Suwon-dong, 000-00-00.

[Based on Recognition] Uncontentious Facts, Gap evidence 2-1, 2, 3, Gap evidence 4-1, 2, Gap evidence 9, 10, 16, Eul evidence 3, 4, Eul evidence 6-1, 2, 7, and 8, and the purport of the whole pleadings

C. In light of the following circumstances acknowledged by the evidence as above and the above facts admitted, the plaintiffs cannot be deemed to have cultivated not less than 1/2 of their own labor force in the First and Second Land of this case for not less than 3 years from November 12, 2007. Thus, the plaintiffs' assertion is without merit.

(1) In light of the following: (a) the category of land entered in the public register is the field of land; and (b) HanD received rice direct payments on the ground that HanD actually cultivated it from 2005 to 2009. The purchase of seedlings and fertilizers, etc. under the name of thisB; (c) the farmers of the first and second farmlands in the farmland ledger in this case were BB; and (d) the Plaintiff AA had worked as the representative director of the FF Development Co., Ltd. during the period of self-defense as claimed by the Plaintiffs, not the Plaintiffs, but the Plaintiff B had cultivated the first and second farmlands in this case.

(2) In light of the fact that most of the seedlings purchased by thisB were dead, and there are only a small number of seedlings, etc., it seems that the Plaintiffs, even if they planted seedlings in the First and Second Land of this case, did not properly perform the farming work necessary for the management of seedlings.

5. Conclusion

Therefore, the plaintiffs' claim is dismissed as it is without merit, and it is so decided as per Disposition.