Cho High Court Decision 2009Du3115 ( August 12, 2009)

It does not meet the requirements of residence and cultivation to obtain the reduction or exemption of capital gains tax on the substitute land for farmland.

It does not meet the requirements of residence and cultivation to obtain a reduction or exemption of capital gains tax on farmland substitute land and not directly cultivated at the time of transfer;

2010Guhap468 Revocation of Disposition of Imposing capital gains tax

Park ○

○ Head of tax office

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of KRW 111,040,000 for the Plaintiff on July 1, 2008 shall be revoked.

1. Details of the disposition;

A. On December 24, 1996, the Plaintiff acquired 1,750 square meters of ○○-dong 212-1, 000 square meters (hereinafter referred to as “point farmland”), but transferred it to the Korea Land and Housing Corporation (formerly named Korea Land and Housing Corporation) on December 27, 2006, and acquired △△△△-ri land, etc. around April 2007 and May 2007.

B. On January 5, 2007, the Plaintiff scheduled and paid KRW 17,381,120 by applying Article 70 of the Restriction of Special Taxation Act (Reduction and Exemption of Transfer Income Tax for Farmland Substitute Land) to farmland in dispute.

C. The Defendant, on the ground that the Plaintiff did not reside in the location of the issue, excluded the said capital gains tax reduction or exemption, and on July 1, 2008, notified the Plaintiff of KRW 111,040,000 for capital gains tax belonging to the year 2006 (hereinafter “instant disposition”).

D. The Plaintiff filed an appeal with the Tax Tribunal on August 12, 2009 on October 10, 2008, but was dismissed on October 20, 2009.

[Grounds for recognition] Class A, Nos. 1, 2, 3, and 1, and the purport of the whole pleadings

2. Whether a disposition is lawful

A. The plaintiff's assertion

From November 1, 1996 to March 2001, the Plaintiff directly cultivated the controversial farmland while residing in the location of the farmland at ○○○-dong, 225-5, etc. In such a case, even if he did not reside in the location of the farmland at the time of the transfer date of the major farmland (27 December 27, 2006), even if he did not reside in the location of the farmland at the time of the transfer of the farmland (2006.12.27)

B. Relevant statutes

The period of amendment shall not be stated separately in the attached Form, and the period of reference in the main sentence shall not be stated separately.

(c) Whether residing in the location of a farmland and direct cultivation are recognized;

(4) According to the Plaintiff’s respective entries and videos (such as a real estate lease agreement, a photograph, a farmland ledger, a statement of payment of compensation, and a letter of guarantee) of No. 4 through No. 9 are recognized as follows: ① from November 1996 to March 200, the Plaintiff’s domicile on the resident registration abstract was 225-5, 201 to March 201, 200, or from 200, the Plaintiff’s entry of No. 249 to 200 to 30,000, and the Plaintiff’s above farmland rent No. 29 to 30,000 to 40,000 were owned by the Plaintiff’s husband; ② from 196 to 205, the Plaintiff’s entry of the above farmland rent No. 9 to 206 to 30,000 to 30,000, 204 to 205.

D. Whether direct cultivation should be done at the time of transfer

As above, the Plaintiff does not meet the requirements of residence and cultivation to obtain capital gains tax reduction for farmland substitute land, and the system of capital gains tax reduction and exemption for farmland substitute land pursuant to Article 70(1) of the Restriction of Special Taxation Act and Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act is intended to protect farmers by allowing and guaranteeing free substitution of farmland, thereby promoting the development and encouragement of agriculture. Article 70(1) of the Restriction of Special Taxation Act provides substitute land as its subject, and unlike the requirements of capital gains tax reduction and exemption for farmland substitute land for not less than 8 years in direct cultivation for not less than 6 years, in light of the fact that the requirements of capital gains tax reduction and exemption for farmland substitute land are directly cultivated for not less than 6 years in total, the Plaintiff should be deemed to have resided in the location at the time of transfer in order to reduce and exempt capital gains tax for farmland substitute land, and it cannot be interpreted that only three years prior to the transfer have been resided or cultivated (see, e.g., Supreme Court Decisions 87Nu706, Mar. 8, 198, 1995).

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed for reasons.