It is not recognized that direct cultivation has been made for at least eight years.

It is insufficient to recognize the fact that the Plaintiff directly cultivated crops, etc. from the land of this case for not less than eight years.

2013Guhap3182 Revocation of Disposition of Imposing capital gains tax

Park AA

BB Director of the Tax Office

June 24, 2014

July 18, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 56, capital gains tax of KRW 670 against the Plaintiff on April 1, 2013 is revoked.

1. Details of the disposition;

A. On July 24, 1996, the Plaintiff purchased 3,785 square meters of 3,785 square meters of DE EEF 32X Gi 32X 3,785 square meters, and HH purchased 2,785 square meters of 3,785 square meters of the above land from ParkCC on the same day. The Plaintiff and HH completed the registration of ownership transfer under their own name with respect to each of the above shares on August 21, 1996.

B. Thereafter, on May 27, 1997, the above land was divided into 32X-2 2,401 square meters prior to 32X-2, and 32X-3 78 square meters prior to 32X-3,00 square meters prior to 32X-3, such as DEE-gun Fri, Gi, 32X-32X (hereinafter “instant land”).

C. On October 23, 1997, the Plaintiff completed the registration of ownership transfer based on the partition of co-owned property on October 20, 1997 as to the whole shares owned by HH among the instant land, and became a single owner of the instant land.

D. On October 15, 201, the Plaintiff entered into a sales contract with ParkG and the instant land for sale at KRW 215, commercialization,000, and transferred the instant land to ParkG on November 30, 201.

E. On January 27, 2012, the Plaintiff filed a preliminary return on capital gains tax following the transfer of the instant land, on the ground that the instant land constitutes self-employed farmland for at least eight years as prescribed by Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 11133, Dec. 31, 201; hereinafter “Act”).

F. However, the Defendant denied the special deduction for long-term possession of the instant land and the reduction of capital gains tax on the ground that the current status of the instant land appearing in satellite photographs does not constitute farmland, and that the Plaintiff cannot be deemed to have cultivated the instant land for at least eight years as a result of the on-site inspection of the instant land on January 7, 2013.

G. Accordingly, on April 1, 2013, the Defendant issued a correction and notification of KRW 56, 670 (including additional tax of KRW 7,749,239) to the Plaintiff (hereinafter “instant disposition”).

H. On June 24, 2013, the Plaintiff filed an appeal seeking the revocation of the instant disposition with the Tax Tribunal, which was dismissed on September 16, 2013.

[Reasons for Recognition] Unsatisfy, Gap evidence Nos. 1, 2, 4, 6, 8, Eul evidence Nos. 1, 2, Eul evidence Nos. 3-1, Eul evidence Nos. 4-1, 6, 8, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

From the date of purchase of the instant land, the Plaintiff manages approximately 120 glux trees and big tree for landscaping purposes in the instant land. The instant land is used as farmland until now, as farmland, as the Plaintiff cultivated directly for not less than eight years. Therefore, denying the reduction or exemption of capital gains tax on the transfer of the instant land, and imposing capital gains tax on the Plaintiff is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 69(1) of the Act provides, “The amount of tax equivalent to 100/100 of capital gains tax shall be reduced or exempted for income accruing from the transfer of land prescribed by Presidential Decree, among the land directly cultivated by a resident prescribed by Presidential Decree who resides in the seat of farmland for at least eight years.” Article 66(13) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 23590, Feb. 2, 2012; hereinafter “Enforcement Decree”) provides, “Direct farming” means that a resident is constantly engaged in the cultivation of crops or the growing of perennial plants on his/her own farmland or who cultivates or cultivates at least half of farming works with his/her own labor.”

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted in accordance with the text of the law, barring special circumstances, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, the strict interpretation of the provisions that can be clearly viewed as the preferential provisions among the requirements for reduction or exemption is also the principle of fair taxation.

Compared with this.

Therefore, the meaning of "direct cultivation" as a requirement for reduction or exemption of capital gains tax should be strictly seen depending on whether a resident is engaged in cultivating crops in his/her own farmland at all times or by cultivating or cultivating more than half of farming works with his/her own labor, and the burden of proving the fact of directly cultivating the transferred land at the seat of farmland for not less than eight years shall be borne by a taxpayer who asserts reduction or exemption of capital gains tax in accordance with the above provision (see, e.g., Supreme Court Decision 94Nu96, Oct. 21, 194).

2) We examine the instant case in accordance with such legal doctrine.

The respective descriptions and images of Gap evidence Nos. 5, 9, and 10 are insufficient to recognize the fact that the plaintiff used the instant land as farmland until the date of transfer that the plaintiff directly cultivated crops, etc. from the instant land for at least eight years, and no other evidence exists to prove otherwise.

Rather, in full view of the aforementioned evidence, the following facts can be acknowledged in light of the respective descriptions of the evidence Nos. 3, 4, and 5 and the overall purport of video and pleading.

① Satellite photographs showing the current status of the instant land in 2011 are as follows:

② The instant land does not seem to be a trace of cultivation on the satellite and photographic land, and a vehicle is parked on the surface of the road, and agricultural products, etc. are not visible at such place.

③ At the right time of the on-site inspection conducted by the public official in charge of the Defendant, Kim H has operated the above restaurant since 1998, and from that time, he stated that the instant land was abandoned and was not cultivated.

④ In addition, from around 2007 to 2 years, Kim H expressed that the Plaintiff did not grow in the instant land and that Kim H left it alone as it was, around 2009.

⑤ At the time of the investigation by the public official in charge of the Defendant, the Plaintiff also confirmed that there was no farming house in the instant land from 2007.

④ The Plaintiff paid property tax on the instant land from around 2005 to around 2011, and the land category of the instant land is indicated as the miscellaneous land in its imposition status.

7) The Plaintiff stated at the edge of the instant land, that he was planted about 120 glusss from EE group with approximately 120 glussss, which was supplied without compensation from EE group, and there are no other circumstances to deem that the said trees were cultivated for sale purposes.

8. The KimK stated that it had all the farming equipment necessary for the deaf company, and that it had been engaged in the sales of the instant land every year from the time the Plaintiff purchased the instant land.

3) Therefore, the instant disposition is lawful, and contrary to this, the Plaintiff’s above assertion is without merit.

3. Conclusion

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