Appropriateness of taxation disposition that calculates the amount of capital gains by the actual transaction price, considering the non-business land

Since the acquired farmland exceeds the farmland size standard for the purpose of weekend and experience farming prescribed in the Farmland Act, the disposition of calculating the capital gains tax based on the actual transaction price is legitimate.

Article 96 of the Income Tax Act

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

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of capital gains tax of KRW 3,00,400 against the plaintiff on May 15, 2007.

The reasoning of the court's explanation concerning this case is the same as the entry of the reasoning of the judgment of the court of first instance. Thus, it is acceptable to accept this as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420

Therefore, the judgment of the first instance court is legitimate, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.

[Insuwon District Court 2007Guhap1093, 2008)]

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 3,00,400 against the Plaintiff on May 15, 2007 is revoked.

1. Details of the disposition;

The following facts shall not be disputed between the parties, or may be recognized by the statements in Gap's 1 to 3, Eul's 1 and 2:

A. On October 7, 1996, the Plaintiff completed the registration of ownership transfer with respect to 2,92 square meters prior to ○○○○○○○, Gangwon-do, ○○○○○○○, ○○○○, ○○○○, and 2,92 square meters (hereinafter “instant land”). On October 16, 2006, the Plaintiff transferred the ownership transfer to ○○○ on the same day.

B. On January 2, 2007, the Plaintiff reported and paid KRW 1,028,270,000, which is calculated by calculating the amount of capital gains by deeming the standard market value as the transfer value with respect to the transfer of the instant land.

C. On May 15, 2007, the Defendant decided and notified KRW 3,00,400,000 as transfer income tax for the year 2006 calculated by calculating the transfer value as the actual transaction value on the ground that the instant land constitutes non-business land (hereinafter “instant disposition”).

D. On May 28, 2007, the Plaintiff, who was dissatisfied with the instant disposition, filed an objection against the Defendant on May 28, 2007, but was dismissed. On June 28, 2007, the Plaintiff filed an appeal with the National Tax Tribunal for adjudication on June 28, 2007, but was dismissed on November 22, 2007.

2. Whether the disposition is lawful.

A. The plaintiff's assertion

Although the Plaintiff did not reside at the location of the instant land, since he/she owned and cultivated the instant land for the weekend and experience farming, the instant disposition imposing capital gains tax according to the standard market price is unlawful even though it is necessary to impose capital gains tax according to the actual transaction price.

(b) Related statutes;

Article 168-8 (Scope, etc. of Farmland)

Article 6 (Restriction on Ownership of Farmland)

Article 7 (Maximum Limit of Farmland Ownership)

C. Determination

Article 96 (2) of the Income Tax Act provides that the transfer value of land shall be based on the standard market price as at the time of transfer of the relevant land where it is transferred until December 31, 2006: Provided, That in the case of land for non-business use under Article 104-3 of the Income Tax Act, the actual market price as at the time of transfer shall apply. Accordingly, Article 104-3 (1) 1 of the former Income Tax Act (amended by Act No. 8825 of Dec. 31, 2007) of the former Income Tax Act, Article 168-8 (2) and (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618 of Feb. 22, 2008), and Article 6 (2) 2-2 of the former Farmland Act (amended by Act No. 8352 of Apr. 11, 2007) provides that farmland shall be excluded as farmland for non-business use or farmland for non-business use, or farmland (referring to autonomous or farmland).

With respect to the instant case, there is no evidence to acknowledge that the Plaintiff was registered as a resident in the district of Si/Gun/Gu or Si/Gun/Gu adjacent to the location of the instant land and actually resided therein, barring any special circumstance. However, as to whether the instant land constitutes farmland owned for weekend and experience farming that is excluded from the land for non-business use, the farmland ownership for the purpose of weekend and experience farming was permitted as the farmland ownership for the purpose of weekend and experience farming was newly established on December 28, 2002 under Article 6 (2) 2-2 of the Farmland Act (amended on January 1, 2003) and its ownership was less than 1,000 square meters on a household basis. Since the Plaintiff acquired the instant land on October 7, 1996, and the area of the instant land was 2,922 square meters, it cannot be deemed that the instant land constitutes farmland for non-business use, as seen earlier.

Therefore, the instant disposition that the Defendant calculated the transfer income tax by deeming the actual transaction price of the instant land as the transfer value is lawful, and the Plaintiff’s assertion is without merit.

3. Conclusion

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