Early High Court Decision 2008J 0937 (Law No. 96.30)

Non-taxation from capital gains tax on farmland substitute land

It is reasonable to deem that, although the farmland was directly cultivated, it was proved that the surrogate cultivator did not meet the non-taxation requirements due to the substitute farmland.

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

1. The plaintiff's claim is dismissed.

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

The defendant's disposition imposing capital gains tax of 235,99,230 won on the plaintiff on December 7, 2007 shall be revoked.

1. Details of the disposition;

A. On September 23, 1980, the Plaintiff acquired 1748 m25 m2, 1749 m2, 1749 m2, and 1750-5 m286 m2 (hereinafter “each of the instant farmland”) by inheritance, and transferred it to m21 December 2005.

B. On February 24, 2006, the Plaintiff filed a non-taxation report with the Defendant on the ground that the income from the transfer of each of the instant farmland was income accrued from the substitute farmland for farmland, and on June 13, 2006, the Plaintiff acquired the land for each of the instant substitute farmland of this case (hereinafter “each of the instant substitute farmland”).

C. On June 13, 2007, the Defendant notified the Plaintiff of the pre-announcement of taxation on the ground that income from the transfer of each farmland of this case does not apply to non-taxation regulations due to farmland substitute land. Accordingly, the Plaintiff paid KRW 235,99,230 to the Plaintiff on July 12, 2007.

D. Accordingly, on December 7, 2007, the Defendant rendered the instant disposition that the transfer income tax belonging to the year 2005 due to the transfer of each of the instant farmland was paid to the Plaintiff in KRW 235,99,230, or that there was no notified tax amount since the Plaintiff had already paid it.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2 (including additional numbers), Eul evidence Nos. 1, 7, and 8, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff acquired each farmland of this case and cultivated for more than 20 years, and from around 202 to around 200, caused a disease, such as saved salt, etc., so that he inevitably requested a priorCC to make it difficult to develop a save, thereby making the cultivation by proxy of each farmland of this case for about two years. The plaintiff acquired each substitute farmland of this case within one year after the transfer of each farmland of this case, and cultivated until now, and therefore the plaintiff satisfies the requirements for non-taxation of capital gains tax due to substitute farmland of this case. Thus, the disposition of

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Article 89 subparag. 4 of the former Income Tax Act (amended by Presidential Decree No. 7837 of Dec. 31, 2005) and Article 153(2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005) provide that the purpose of this provision is to protect farmers and promote the development and encouragement of agriculture by allowing and guaranteeing free substitution of farmland. In this case, ① the previous land and new land shall be farmland; ② the transferor of the previous land shall be the one who own the land at the time of the transfer; ③ the transferor shall acquire the new land at the time of the transfer; ④ the area of the newly acquired farmland is more than the area of the transferred farmland, or the value of the transferred farmland is more than 1/2 of the value of the farmland, and the land must be cultivated under his responsibility and calculation even if it is not necessarily cultivated by the person himself, and a person who has another person cultivate the land by way of entrustment management, lease by surrogate, lease by proxy, or loan, etc.

(2) As to the instant case, the Plaintiff is the Plaintiff at the time of transfer of each of the instant farmland by proxy at the Plaintiff’s request. As such, the Plaintiff’s income from the transfer of each of the instant farmland did not meet the non-taxation requirements due to farmland substitute land under the former Income Tax Act without further examining the remainder of the income from the transfer of each of the instant farmland. Thus, the Plaintiff’s assertion is without merit and the disposition of the instant farmland is lawful.

3. Conclusion

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