Imperial Chemical Industries of Australia & New Zealand Ltd v Commissioner of Taxation (Cth) [1970] HCA 9

High Court of Australia Kitto J. Imperial Chemical Industries of Australia & New Zealand Ltd v Commissioner of Taxation (Cth) [1970] HCA 9

ORDER Appeal dismissed with costs. Usual order as to exhibits.

Cur. adv. vult.

March 25 Kitto J. delivered the following written judgment:—

This appeal, which comes from a Board of Review under s. 196 of the Income Tax Assessment Act 1936-1969 Cth, concerns (a) acoustic metal pan fittings and their supporting framework, forming ceilings in two office buildings owned and used by the appellant during the year of income ended 30th September 1961, and (b) such part of the electrical installations in one of those buildings as consisted of wiring and conduits therefor and trunking. The question in regard to each is whether it was "property, being plant, or articles owned by a taxpayer and used by him during (the year of income) for the purpose of producing assessable income" within the meaning of s. 54 of the Act as it stood in relation to that year. If it was, depreciation is allowable in the assessment of the appellant's tax. The Commissioner has disallowed a claim for the depreciation and the Board has upheld the assessment.

Each of the buildings is constructed with two of its four walls substantially of glass and with no permanent partitions. The floor space is divided by movable partitions into such areas as best suit the activities to be provided for from time to time, and many of the partitions do not reach to the ceiling. The consequential advantages as regards lighting and general convenience would be gravely offset by the disadvantage of excessive noise, but for the sound-absorbing quality of the ceilings. They consist of metal panels, or tiles as they are called, having multiple perforations, backed by paper bags containing sound-absorbent material, and each supported by a metal framework, which is attached by metal rods to the concrete floor above. The panels can be readily removed, e.g., for the purpose of gaining access to service pipes that lie in the space between ceiling and the underside of the concrete slab, and they can be moved up or down on their supporting rods. The whole ceiling installation may be removed, if necessary, by cutting the rods. There is nothing unusual nowadays about the provision of such a ceiling, though the panels in the case of the appellant's buildings are of a special size. This and other methods of reducing the noise level in modern buildings are standard practice.

Obviously the ceilings and every part of them, the removable panels no less than the supporting framework, are fixtures and form part of the buildings. The mode of affixation is slight but adequate, and its purpose is to provide the building with ceilings as essential parts of the structure. The purpose, in other words, is to make the building a complete building. The ceilings are there for the sake of the building, not the building for the sake of the ceilings. In my opinion, while they are in position they are plainly not "articles". The appellant's main contention concerning them is that they are "plant". But they are no more than parts of the shelter, so to speak, in which the appellant chooses to carry on its activities. They play no part in those activities. Their sound-absorbing qualities do, no doubt, make working in the building more comfortable, and consequently, I presume, more efficient, and to that extent they are better ceilings than sound-reflecting ceilings would be. But every part of a building makes some contribution to the comfort and efficiency of those who work in it. To take it notionally to bits and describe as "plant" any bit that has a function which is useful in connexion with the business carried on there seems to me indefensible. The truth is that the ceilings with which we are concerned do nothing for the appellant's business that they would not do for the business of any other occupier. They are in like case with the walls, floors, windows and doors, not to mention the roof; that is to say they are useful for anyone who wants to work in the building, and more useful than less well thought out units of the same kind would be, but still only part of a general setting for work, not part of the apparatus of any income-producing process. In my opinion they are not "plant". The case of Jarrold v. John Good & Sons Ltd. [1] provides, in my opinion, not an analogy but a direct contrast.

1. [1963] 1 W.L.R. 214.

The electrical wiring with its enclosing conduits, and the trunking, are also parts of the general equipment of the building, fixtures beyond question, and having no relevance to the activities of the appellant beyond the relevance they would have to any occupier's activities. Together with switchboards, sub-switchboards and junction boxes, they form the reticulation system for conveying throughout the building electric current which is drawn ordinarily from the Melbourne City Council's power supply mains and in emergencies from a diesel electric generating plant in the basement of the building. I see no difference for present purposes between these electricity reticulating agents and the water reticulating pipes that run throughout such a building. It seems to me impossible to regard these elements in the equipment of the building as "plant" any more than as "articles". The construction of the building as a building of the general type to which it belongs would be incomplete without them, and their function does not go beyond making the building a suitable general setting for a wide range of possible activities.

I have been referred to a number of decided cases of which it will be sufficient to mention Yarmouth v. France [1] , and Quarries Ltd. v. Federal Commissioner of Taxation [2] and Inland Revenue Commissioners v. Barclay Curle & Co. Ltd. [3] . In what I have said I have endeavoured to apply the explanations given in those cases of the meaning of "plant" in such a context as that of s. 54.

1. (1887) 19 Q.B.D. 647. 2. (1961) 106 C.L.R. 310. 3. [1969] 1 W.L.R. 675.

In my opinion the Commissioner and the Board of Review were right and the appeal should be dismissed.