early 2010 Heavy3099 ( December 22, 2010)

No farmland shall be deemed self-fluent for at least eight years;

In order to fall under farmland, it is not sufficient to simply provide convenience in the management of farmland, and it is required to be "necessary land" in the management of farmland, and it is not sufficient to recognize that the land in this case has functioned as land directly necessary for the management of farmland such as farming, compost, acquisition of land, branch, concentration, waterway, etc. which is more than the mere provision of convenience, so a disposition imposed by applying the heavy taxation rate by deeming it as idle land is legitimate.

2011Guhap1638 Revocation of Disposition of Imposing capital gains tax

XX

O Head of tax office

July 20, 2011

July 27, 2011

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 103,651,830 against the Plaintiff on July 1, 2010 is revoked.

1. Details of the disposition;

A. The plaintiff's land acquisition and transfer process

o On July 20, 1999, acquiring 186-2 2,132 m2m2, Nam-gu, Incheon by voluntary auction.

o Division of land on February 1, 2001: the above 186-2 square meters, 655 square meters, and 186-3 square meters, 1,477 square meters, such as 186-3 square meters.

o. Change of land category on April 6, 2001: the above 186-2 land category, the above 186-3 land category, the above 186-3 land category (hereinafter referred to as the "before the case").

o After running a restaurant with a building on the above site, the Plaintiff cultivated crops on the previous site of this case while operating the restaurant.

o on April 29, 2008, the former part of the instant case was sold to Dong-dong, Inc. (the purchase price of KRW 1.3 billion) and the ownership transfer registration fee on May 8, 2008 (the first part of the site also was sold to Nonparty New-A).

B. The process of taxation prior to the instant case

o Report on the Confirmation of Transfer Income Tax on May 28, 2009: The application of the provisions on reduction or exemption of transfer income tax to the Plaintiff on the ground that the Plaintiff falls under his own farmland for at least eight

o Notice of Pre-Announcement of Taxation of Transfer Income Tax of 571,453,360 won for the portion belonging to April 20, 2010: the defendant shall regard 1,071.74 square meters for the preceding period of this case as non-business land and apply of heavy tax rates.

o In accordance with the Plaintiff’s request for pre-assessment review, the Defendant, on June 16, 2010, decided to reduce or exempt capital gains tax on the remainder of the area excluding 368 square meters (referred to as “the instant land”) before the instant case and to re-determine the amount of tax.

o On July 1, 2010, notice of KRW 103,651,830 of the transfer income tax for the land at issue of this case for the year 2008 (hereinafter “instant disposition”).

o The Defendant filed an appeal with the Tax Tribunal on September 28, 2010 on the instant disposition, but the Tax Tribunal dismissed the said appeal on December 22, 2010.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1 through 7 (each number is issued), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The key land of this case constitutes land directly required for farmland management under Article 27 (1) of the Enforcement Rule of the Restriction of Special Taxation Act (hereinafter referred to as the "Act"), and thus, the capital gains tax reduction and exemption provisions for self-arable farmland should also be applied.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) The Plaintiff had cultivated crops for not less than eight years while living in the previous location prior to the instant case. However, as there is no dispute between the parties as to whether the instant land was used for “direct farming” under Article 69(1) of the Act, it is limited to whether the instant land falls under the land stipulated in Article 27(1) of the Enforcement Rule of the Act.

(2) In light of the principle of no taxation without law, or the principle of no taxation without law, the interpretation of tax laws shall be interpreted as the legal text, barring any 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 seen as clearly preferential provisions among the requirements for reduction or exemption accords with the principle of fair taxation (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003). Article 27(1) of the Enforcement Rule of the Act and Article 168-8(1) of the Enforcement Decree of the Income Tax Act include the parts of land directly necessary for the management of farmland within the scope of farmland excluded from the scope of non-business land under Article 104-3 of the Income Tax Act, and the capital gains tax shall be reduced by being excluded from the scope of non-business land subject to heavy taxation and thus, each of the above provisions must be strictly interpreted in light of the above legal principles.

(3) When interpreting each of the above provisions in accordance with the law, it is insufficient to simply provide convenience to the management of farmland in order to constitute farmland stipulated in each of the above provisions, and it is required to be "necessary land" directly in the management of farmland. Accordingly, the testimony of Gap evidence 5, No. 6-1, No. 2, and witness KimB submitted by the plaintiff is insufficient to recognize that the pertinent land had functioned as land directly necessary for the management of farmland, such as farming, compost, water supply, water supply, water supply, water supply, farm, and waterway, and there is no other evidence to acknowledge it otherwise.

(4) As long as it is difficult to view the instant land as falling under the land stipulated in Article 27(1) of the Enforcement Rule of the Act, the Plaintiff’s assertion on a different premise is without merit.

3. Conclusion

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