Cho High Court Decision 2009J 2089 (Law No. 29, 2009)

Whether transferred farmland constitutes land for non-business use

The plaintiff is a reason to suspect that he/she had earned earned income in an agricultural cooperative, but does not interfere with the above recognition when considering the nature of work, size of farmland, and current status of the plaintiff's farmland ownership.

The contents of the decision shall be the same as attached.

○ Kim

Deputy Director of the Tax Office

1. The Defendant’s imposition of KRW 121,478,210 on the Plaintiff on February 11, 2009 shall be revoked.

2. The litigation costs shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On October 1, 2002, the Plaintiff acquired and possessed ○○○-dong 297-7 ○○-dong 297-7 4,450 m2 (hereinafter “instant land”). On March 20, 2008, the Plaintiff: (a) transferred the same 297-7 m2,225 m25 m2 to NowonA; and (b) transferred the 297-12 m2,225 m2,225 m2 to KimB on April 18, 2008, the Plaintiff reported and paid the transfer income tax according to the basic tax rate at the time of preliminary return of the transfer income tax.

B. Accordingly, the Defendant: (a) deemed that the Plaintiff engaged in other occupation and performed cultivation on commission of most of the agricultural machinery work; and (b) deemed that the instant land constitutes non-business land; and (c) applied 60% of the heavy tax rate under Article 104(1)2-7 of the Income Tax Act by applying the heavy tax rate of 121,478,210 won to the Plaintiff on February 11, 2009 (hereinafter the instant disposition).

C. The Plaintiff appealed and filed an appeal on May 1, 2009, but was dismissed on June 26, 2009, and the Plaintiff filed the instant lawsuit on September 23, 2009.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, 3, Eul evidence 1 and 2

2. The plaintiff's assertion

Since the Plaintiff moved from October 21, 1996 to ○○ City, which is the location of the instant land, the Plaintiff had been living in ○○○ City, and has been working for ○○○ Agricultural Cooperative in ○○○ City, ○○○, and has been working for ○○ City, ○○.

3. Related Acts and subordinate statutes.

Article 104-3 of the Income Tax Act (Amended by Act No. 10221, Mar. 3, 2010)

Enforcement Decree of the same Act (amended by Presidential Decree No. 21301 of Feb. 4, 2009)

4. Determination

The key issue of this case is whether the land of this case constitutes non-business land.

Specifically, in full view of Article 104-3 of the Income Tax Act and Article 168-6 subparagraph 1 of the Enforcement Decree of the Income Tax Act, the determination of land for non-business use should be made depending on whether the Plaintiff re-satisfed and re-satisfed with respect to the land of this case for a period of not less than three years in total among the five years immediately preceding the transfer date, for not less than two years in total among the three years immediately preceding the transfer date, for not less than two years in total among the three years immediately preceding the transfer date, or for not less than 80/10 of the ownership period for not less than 80/100.

First of all, in relation to the burden of proof, the transfer income tax rate shall be increased if the land for non-business under Article 104-3 of the Income Tax Act is transferred. Whether it falls under the land for non-business use is the fact of taxation requirements and the tax authorities should generally prove it. However, the Income Tax Act widely prescribes the land for non-business use as the grounds for reduction and exemption in substance, and the income tax law functions as the grounds for non-business use. In the case of farmland, the person liable for tax payment can easily prove it as the matters belonging to the territory of the person liable for tax payment, while it is difficult for the tax authorities to prove the existence of "non-business", it is difficult for the person liable for tax payment to prove it as the nature of the proof, and in light of the fact that the tax authorities adopts the method of return and payment for the transfer income tax, it is reasonable for the person liable for tax payment to select the relevant taxation requirements and submit the supporting materials.

Comprehensively taking account of the overall purport of arguments as to the testimony of rice farming as evidence Nos. 4 through 8 and witness lectures, the Plaintiff stated that rice farming was cut down from July 2, 2003 under the farmland ledger. The Plaintiff received subsidies on November 15, 2007. The Plaintiff did not own farmland other than the land in this case, and was engaged in agriculture from the enemy, and was directly engaged in the work necessary for rice farming. From July 21, 2003, it can be acknowledged that the Plaintiff used the rice farming industry in this case’s land. Considering the above facts, it can be acknowledged that the Plaintiff used the rice farming industry in light of the size of the machinery in this case and the fact that the Plaintiff used the rice farming industry in light of the objective evidence proving the agricultural industry in light of the above facts, the Plaintiff did not directly prove the above facts, but did not have any other reasons to prove that the Plaintiff did not own the agricultural industry in this case.

Therefore, the disposition of this case is unlawful in the application of the transfer income tax rate on the transfer of non-business land. To point out this, the plaintiff's claim seeking the cancellation of the disposition of this case is reasonable, and it is so decided as per Disposition.