Hotel building's electrical and sanitary fittings classified as "plant" for depreciation. Revenue wins in denying higher initial depreciation claim.

The court ruled that electrical installations and sanitary fittings in a hotel building are classified as "plant" and not part of the building for depreciation purposes. The Tribunal's decision to disallow initial depreciation for these fittings was upheld, stating that even though fixed to the building, they do not become part of it. The court favored the Revenue, denying the assessee's claim for higher initial depreciation under section 32(1)(v) of the Income-tax Act, 1961. The judgment emphasized that such fittings are considered tangible assets separate from the building itself.

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Issues:
Interpretation of the term "building" for depreciation purposes regarding electrical installations and sanitary fittings in a hotel building for the assessment year 1979-80.

Analysis:
The assessee contended that electrical installations and sanitary fittings in a hotel building should be considered part of the building for depreciation purposes. The contention was based on the argument that once these installations are embedded in the building, they become part of it and should qualify for higher initial depreciation under section 32(1)(v) of the Income-tax Act, 1961. The assessee referred to the Supreme Court case of CIT v. Taj Mahal Hotel [1971] 82 ITR 44, where such fittings were recognized as "plant" for development rebate. However, the court disagreed with this submission, stating that section 32 of the Act refers to buildings, machinery, plant, and furniture as tangible assets, and the term "building" does not encompass fittings like electrical installations and sanitary fittings.

The court highlighted that while the Supreme Court in the Taj Mahal Hotel case considered sanitary fittings as "plant" for development rebate, it did not classify them as part of the building for depreciation purposes. Additionally, the court cited the case of CIT v. N. Sathyanathan and Sons Pvt. Ltd. [2000] 242 ITR 514, which emphasized that the essential amenities like sanitary fittings in a hotel building are to be regarded as "plant" for depreciation. The apex court in the case of CIT v. Anand Theatres [2000] 244 ITR 192, 217, also supported this interpretation. Therefore, the court concluded that electrical installations and sanitary fittings are considered "plant" and not part of the building for depreciation purposes.

The Tribunal's decision to disallow initial depreciation for electrical installations and sanitary fittings in the hotel building was upheld by the court. The court answered the question regarding the eligibility of initial depreciation under section 32(1)(v) of the Income-tax Act, 1961, in favor of the Revenue and against the assessee. The judgment clarified that such fittings, although fixed to the building, do not transform into part of the building itself but remain classified as "plant" under the depreciation provisions of the Act.

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