Cho High Court Decision 2012 Deputy 4543 ( December 31, 2012)

The disposition of exclusion from reduction or exemption is legitimate because it cannot be deemed that the substitute land was cultivated directly.

Considering the distance between the land and the place of residence and the income situation, it was difficult for a third party to directly cultivate a farmland in the land, and the fact that the third party who resides in the location of the land received subsidies for preserving rice income, and confirmed that the third party cultivated the land at the time of the on-site verification by the tax authority, it cannot be deemed that the substitute land was directly cultivated.

2013Guhap299 Revocation of Disposition of Imposing capital gains tax, etc.

IsaA

Head of Jinju Tax Office

July 16, 2013

August 13, 2013

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of August 1, 2012 (the Plaintiff stated the date of disposition as of August 6, 2012, but it appears to be a clerical error) was revoked. The imposition disposition of KRW 000 of the capital gains tax for 2009 and the special rural development tax for 000 won is revoked.

1. Details of the disposition;

A. On June 1, 2009, the Plaintiff transferred O00-1 2,493 square meters (hereinafter referred to as “previous farmland”) in Geumnam-do (hereinafter referred to as “Seoul-do”). On July 31, 2009, the Plaintiff acquired O00-21 3,196 square meters (hereinafter referred to as “the instant land”).

B. On November 17, 2011, the Plaintiff filed an application for reduction or exemption of capital gains tax for farmland substitute land pursuant to Article 70(1) of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter the same) with the Defendant by filing a report on capital gains tax following the transfer of previous farmland.

C. On August 1, 2012, on the ground that the Plaintiff did not directly cultivate the instant land and did not meet the requirements for reduction and exemption of capital gains tax on farmland substitute land as a result of the on-site verification survey, the Defendant decided and notified the Plaintiff of KRW 000 of capital gains tax for the transfer of the previous farmland and KRW 000 of special rural development tax for the transfer of the previous farmland (including additional tax for the transfer of the previous farmland) (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on October 15, 2012, but was dismissed on December 31, 2012.

[Ground of recognition] Facts without dispute, Gap evidence 1-1, 2, Gap evidence 2-1, 4, 6, Eul evidence 1, 2, and 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff cultivated the instant land directly, the income from the transfer of the previous farmland constitutes the reduction or exemption of capital gains tax under Article 70(1) of the former Restriction of Special Taxation Act, the Defendant did not recognize the reduction or exemption of capital gains tax on a different premise. Therefore, the instant disposition is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 70(1) of the former Restriction of Special Taxation Act and Article 67 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 23590, Feb. 2, 2012) provide for the protection of self-employed farmer and the promotion of agriculture by allowing and guaranteeing free substitution of farmland. The subject of such reduction or exemption is limited to the case where it is intended to substitute the farmland acquired by the self-employed farmer for the ‘necessary for cultivation'. Therefore, in order to be eligible for reduction or exemption of capital gains tax due to the substitute farmland, the previous land and new acquired land shall be farmland. In order to be eligible for reduction or exemption of capital gains tax due to the substitute farmland, it must be directly cultivated while residing in the previous farmland for more than three years and residing in the new farmland for more than three years, and the "direct cultivation of farmland" in this context means that a resident is constantly engaged in the cultivation of crops or perennial plants on his own farmland, or cultivated or cultivated with 1/2 or more of the farming work with his own labor. Meanwhile, the burden of proof on the above requirements is claimed for exemption of capital gains tax (see, 90.

2) Examining whether the Plaintiff directly cultivated the instant land in light of the following circumstances acknowledged by comprehensively taking into account the respective descriptions of evidence Nos. 5-1, 6-1, 7, and 10, which are shown consistent with the Plaintiff’s assertion, it is difficult to believe that the respective descriptions of evidence Nos. 5-1, 6-1, 7-1, and 5 of evidence Nos. 6-5, 7-1 through 5, and 9-1 through 4 of evidence Nos. 6-1, 9-1, and 9 of this Court, and the fact-finding results of each fact-finding with respect to the head of the OO and O of this court, are insufficient to acknowledge that the Plaintiff had been engaged in cultivating the instant land on a regular basis in cultivating the instant crops or cultivated at least half of farming work with its own labor. Therefore, the Plaintiff’s assertion is without merit.

① The Plaintiff’s residence and the instant land are the distance from 52.4km to the point of time required for a car. Moreover, since around 2008, the Plaintiff operated a duty-free shop related to child welfare and gets income while taking lectures. In light of the distance between the Plaintiff’s residence and the instant land and the Plaintiff’s income status, it was difficult for the Plaintiff to directly embling the farmer’s house on the instant land in parallel with the instant activities.

② HB, who resides in the instant land, received subsidies for preserving rice income in 201 for the instant land, and the Plaintiff did not have received subsidies for the instant land. At the time the Defendant confirmed the instant land on May 9, 2012, HB’s wife KimCC continued to cultivate the instant land by leasing it from 2010, and received direct payments from HBP. The Plaintiff paid five islands of rice as a tenant in 2010 and 201. From 2010 to 2010, the Plaintiff prepared and submitted a specific confirmation document to the effect that the Plaintiff would have cultivated the instant land. In light of the aforementioned circumstances, it is difficult to acknowledge that HBB cultivated the instant land in light of the purport of the reduction or exemption of capital gains tax on the instant farmland.

The Plaintiff’s certificate of membership or the details of purchase of tax-free petroleum, agricultural chemicals, and fertilizers submitted by the Plaintiff as evidence are the Plaintiff’s name in the name of KimM, which is the Simdo governor, and there is no evidence to deem that the purchase of the above pesticide is for the cultivation of the instant land. Unlike the foregoing, the details of purchase of agricultural chemicals, etc. directly paid by the Plaintiff for the cultivation of the instant land are not verified. Even if the area of the instant land is equal to 3,196 square meters, there is no evidence to confirm the income earned by the Plaintiff, such as rice purchase.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.