Cho High Court Decision 2010J3884 (Law No. 13, 2011)

It is difficult to recognize substitute farmland as being self-sufficient for not less than three years.

It is difficult to recognize that a substitute farmland has been cultivated directly in light of the fact that a restaurant has been operated within a distance of not less than one hour from the substitute farmland to the vehicle, that land has been abandoned as it is due to the suspension of banking works in the substitute farmland, that the land has been left abandoned as it is, and that there has been no fact that

Article 70 of the Restriction of Special Taxation Act

Article 67 of the Enforcement Decree of the Restriction of Special Taxation Act

2011Guhap12499 Revocation of Disposition of Imposing capital gains tax

IsaA

Head of Sungnam Tax Office

March 30, 2012

April 27, 2012

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 000 for the year 2009 against the Plaintiff on October 8, 2010 is revoked.

1. Details of the disposition;

A. On February 26, 2004, the Plaintiff purchased 1/2 shares (hereinafter “previous farmland”) out of OOO 000 malle 2,998 malle in the south of the wife population, the Plaintiff owned it, and transferred the previous farmland to the YangCC on July 2, 2009. On July 16, 2009, the Plaintiff purchased OO 000 malle 750 malle malle 750 malle malle (hereinafter “alternative farmland”) from Madon on July 16, 2009, and completed the registration of ownership transfer.

B. On August 27, 2009, the Plaintiff filed a preliminary return on the tax base of capital gains tax on the transfer margin of previous farmland with the Defendant, applying Article 70(1) of the former Act on Special Cases Concerning Tax Restriction (amended by Act No. 9921, Jan. 1, 2010; hereinafter the same) which is a provision on reduction and exemption of capital gains tax on farmland substitute land.

C. However, on October 8, 2010, the Defendant denied the reduction or exemption of capital gains tax on the ground of farmland substitute land on the ground that it cannot be deemed that the Plaintiff did not own substitute farmland as a result of the on-site verification survey on substitute farmland, and imposed and notified the Plaintiff of KRW 000 of capital gains tax for the year 2009 (hereinafter “instant disposition”).

D. The Plaintiff was dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on July 13, 201.

The above claim was dismissed.

[Ground of Recognition] Facts without dispute, Gap evidence 1-2, 21 through 30, 37 through 44, 49 through 53, 75 through 84, 89 through 102, Eul evidence 1, 2, 4 through 6, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff asserts that the Defendant’s disposition of this case, which did not recognize capital gains tax reduction or exemption, is unlawful, inasmuch as the Plaintiff acquired substitute farmland within one year from the date of transfer of previous farmland and resided in a new location of farmland for three years, and directly cultivated substitute farmland. Thus, the income from transfer of previous farmland is subject to reduction or exemption of capital gains tax due to substitute farmland for own farmland under Article 70(1) of the former Restriction of Special Taxation Act.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) 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 (wholly amended by Presidential Decree No. 22037, Feb. 18, 2010; hereinafter the same), in order to be subject to the reduction or exemption of capital gains tax due to the substitute land for farmland, ① the previous land and newly acquired land shall be farmland, ② the former land shall be cultivated directly if the former land and newly acquired land are residing in the former land for at least three years, and the former land shall be cultivated directly in the new land for at least three years, and ③ the period between the transfer date of the previous land and the acquisition date of the newly acquired land shall be within one year, and ③ the area of the newly acquired farmland shall be at least 1/2 of the area of the farmland to be transferred, or at least 1/3 of the value of the farmland to be cultivated directly or directly by the transferor of the said farmland for at least 1/198 of capital gains tax on the said farmland.

(2) Based on the above legal principle, in light of the following circumstances, as to whether the Plaintiff cultivated the substitute farmland directly for three or more years, the descriptions and images of Gap evidence 1-3, 4, 54 through 62, 112, 113, Eul evidence 3, and Eul evidence 9, and the overall purport of the pleadings in each part of Eul evidence 1-7 through 20, 45 through 48, 63 through 74, 85 through 88, 103 through 88, 114 through 119, and Gap evidence 2 through 6 (including a serial number), the testimony of the Plaintiff is insufficient to acknowledge the facts, and there is no other evidence to acknowledge the facts.

(A) From January 20, 2005, the Plaintiff operated a restaurant with the trade name of 000, OF GG in Seongbuk-gu, Seongbuk-gu, Sungnam-gu, Seoul. The distance on the road from the above restaurant to the substitute farmland is about 55 kilometers and more hours a vehicle is required for more than one hour.

(B) After acquiring substitute farmland, the Plaintiff paid to Park Ho-h, a construction business operator, the said farmland, KRW 00 on January 13, 2010, and KRW 000 on the same month as part of the construction cost, to Park Ho-h, respectively, on November 19, 2009. However, upon the suspension of the said construction work on January 19, 2010 due to the delay of Park Ho-h’s construction, the Plaintiff left the said land alone as it was by November 2010. In this regard, at the time of the Defendant’s on-site investigation conducted on August 19, 2010, the Plaintiff was in a de facto site on which the Plaintiff did not find any trace of growing and cultivating the crops, as it did not appear in fact.

(C) When the Plaintiff became aware of the imposition of capital gains tax on the ground that the substitute farmland was not cultivated directly, on November 201, 2010 immediately thereafter, the Plaintiff started to install a vinyl house on the instant land and cultivate medicinal crops, such as Blue, without any additional construction.

(D) The Plaintiff did not possess agricultural machinery that can cultivate substitute farmland, and the Plaintiff purchased agricultural materials, such as fertilizers, etc. for the pertinent period, and the Plaintiff appears to have been carried out by nearby farmers instead of the Plaintiff at the time of the acquisition of substitute farmland. In this regard, leapD sold substitute farmland to the Plaintiff appears to have been carried out by nearby farmers, not by the Plaintiff at the time of the transfer of substitute farmland to the Plaintiff. In this Court, leapD testified that the Plaintiff testified that the Plaintiff was frighted with the mother at the time of the transfer of substitute farmland to the Plaintiff, and that it was asked the Plaintiff whether he was frighted.

(3) Therefore, the Defendant’s disposition of this case imposing capital gains tax on the Plaintiff is lawful, deeming that income from the transfer of previous farmland does not fall under the reduction of capital gains tax under Article 70 of the Restriction of Special Taxation Act

3. Conclusion

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