Movable property test for leased plant upheld where installation could be removed, transferred, and sold despite fixation to the earth

An air-conditioning and cold storage plant leased with hotel assets was treated as movable property because the lease documents and memorandum of understanding separately described it as a movable asset, contemplated its surrender on expiry, and reserved the lessor's right to dispose of it. The Court applied the principle that mere fastening to the earth for operational efficiency does not make an installation immovable if it remains capable of removal, transfer, and sale. The levy under section 3F of the U.P. Trade Tax Act was therefore upheld.

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Issues: Whether the air-conditioning and cold storage plant leased along with hotel assets was a movable property and liable to tax under section 3F of the U.P. Trade Tax Act, 1948.

Analysis: The lease documents and memorandum of understanding separately described the air-conditioning and cold storage plant as part of the movable assets of the hotel and provided for a separate lease arrangement. The agreement also contemplated surrender of the movable assets on expiry of the lease and reserved the lessor's right to dispose of them, indicating an intention to treat the plant as movable property. The finding of the Tribunal that the plant was fixed only for operational efficiency and could be removed and installed elsewhere was consistent with the legal test that mere fastening to the earth does not make an installation immovable if it remains capable of being shifted and sold.

Conclusion: The air-conditioning and cold storage plant was correctly held to be movable property, and the levy under section 3F was upheld.

Ratio Decidendi: An installation fixed to the earth for better functioning remains movable if the surrounding circumstances show that it is intended to be treated as a separable asset capable of removal, transfer, and market sale.

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