2011 High Court Decision 0010 (No. 30, 2011)

It is difficult to see that forestry business is conducted.

It is difficult to view that the forest trees were afforested or afforested as part of an independent business in an independent position for profit-making purposes, since there is no cost disbursed to grow forests and fields, most of them were dead or remaining as well as the economic value of them.

2011Gu 9495 Revocation of Disposition of Imposing Capital Gains Tax

XX

Samsung Head of Samsung Tax Office

August 10, 2011

September 7, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant revoked the disposition of imposition of capital gains tax of KRW 67,784,720 against the Plaintiff on February 1, 2010.

1. Circumstances of dispositions;

A. On January 30, 2008, the Plaintiff transferred the price of KRW 500,000,000 to Nonparty 5,000,000,000,000 PW 0-0 Forest land (hereinafter “the forest of this case”) to Nonparty 2, who acquired on October 2, 1997.

B. After that, on March 31, 2008, on the ground that the income from the transfer of forest trees among the income from the transfer of forest trees in this case was not subject to the transfer income tax as business income, the Plaintiff scheduled and paid KRW 15,042,566 of the transfer income tax calculated by applying the transfer value of forest in this case to the standard market price of KRW 165,465,850, and on the forest trees, on May 31, 2009, the Plaintiff reported and paid the comprehensive income tax by deeming the remaining amount after deducting the standard market price of the forest in this case from the total transfer value of forest land

C. Accordingly, on February 1, 2010, the Defendant stated that the transferee of the instant forest did not calculate the price of forest trees at the time of the purchase and sale contract with the Plaintiff, and that on February 1, 2010, the Plaintiff cannot be deemed to operate the forestry business, such as the Plaintiff was registered as a business operator to operate the forestry business. The Plaintiff rendered the instant disposition that corrected and notified the transfer income tax of KRW 67,784,720 for the year 208, considering the entire income from the transfer of the instant forest as transfer income.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2 through 4, 7, 13 (including paper numbers; hereinafter the same shall apply), Eul evidence No. 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) In the instant forest land, the Plaintiff planted KRW 1,225,00 in 198, and KRW 548,00 in local expenses, KRW 1,065,00 in self-governing expenses, and KRW 3,00 in self-governing expenses for five years from around 1998 to around 2002. From around 1998 to around 200, the Plaintiff cut down KRW 1,638,00 in national expenses and KRW 932,00 in self-governing expenses. From around 2006 to around KRW 461,00 in national expenses and KRW 369,00 in local expenses, the Plaintiff’s act of developing forest trees constitutes growing business, and it does not change on the ground that the Plaintiff did not have registered its business.

When the Plaintiff transfers the forest land of this case, a large number of forest trees were located on the forest land of this case, and since the said forest trees were transferred en bloc with the forest land, the transfer value of the forest land should be calculated at the standard market price pursuant to Article 51 (8) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter referred to as the "Enforcement Decree"), and the disposition of this case reported differently is unlawful.

(b) Related statutes;

C. Determination

Article 94(1)1 of the former Income Tax Act provides that income generated from the transfer of land or buildings shall be capital gains, Article 19(1)1 of the same Act provides that income generated from forestry shall be business income, and Article 51(8) of the Enforcement Decree of the same Act provides for the calculation method of gross income in calculating business income generated from the operation of forestry. Therefore, in order to impose separate taxation pursuant to Article 51(8) of the Enforcement Decree of the Income Tax Act, the transfer of trees shall fall under forestry, i.e., business, and if not, the income from the transfer of trees shall be deemed included in the income from the transfer of land, and Article 94(1)1 of the Income Tax Act shall apply

According to the health stand, Gap evidence Nos. 5, 12, and 15 with respect to the instant forest, each of the following facts were disbursed in the forest of this case 1,225,00 won for 198, local expenses of 548,000 won, plaintiffs 1,065,00 won for 3,00 won for 5 years from 198 to 202, and it is difficult to recognize the purport of this case's 1,638,000 won for grass work and 932,000 won for 5 years from 1998 to 206 as part of the plaintiff's self-determination of 2,000 won for 461,00 won for 369,000 won for 36,000 won for 5,000 won for 46,000 won for 20,0000 won for each of the instant forest of this case's forest of this case.

First, the expenses incurred by the Plaintiff for growing big trees in the forest of this case are less than 1 million won, and the sum of growing expenses incurred during 10 years thereafter shall not be less than 1 million won, and since 2003, there is no cost incurred for growing the forest of this case.

Second, even if based on the results of the fact-finding survey conducted on December 2, 2010, most of the 1998-style trees were rarely dead, so it cannot be viewed that the plaintiff can not properly suppose the growing project, and it is difficult to view that there is business income from forestry because the remaining standard tree has little economic value as forest trees.

Third, the plaintiff did not register the business of the forestry until he acquired and transferred the forest land of this case, or did not sell the forest trees by cutting them, and there was no registration under the Act on the Business trees of this case or any registration with a master method.

Fourth, it is natural that the sale contract of the forest of this case states that the 'local planting trees' cannot be cut off only once, and that the forest trees planted in the forest of this case are transferred as part of the forest land, so long as the forest trees planted in the forest of this case do not have the method of registration or name pursuant to the law on standing timber, as seen earlier, ownership is transferred as part of the forest land, and there is no relation as to whether the plaintiff transferred the forest trees in the course of running the forestry as business or not.

Therefore, the disposition of this case imposing transfer income tax on all income from the transfer of forest land of this case on the ground that the plaintiff cannot be deemed to operate a forestry business, is somewhat weak, and the plaintiff's 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.