Case B70

Judges:
JL Burke Ch
RC Smith M
RE O'Neill M

Court:
No. 1 Board of Review

Judgment date: 25 September 1970.

---

J. L. Burke (Chairman) and R. C. Smith, Q.C., and R.E. O'Neill (Members): Taxpayer owns land with a large office building erected thereon in Sydney and such land and building is leased to C Pty. Ltd under an agreement of lease dated 26 June 1962 for the term of forty years computed from such date. In its return for the substituted accounting period ended 31 December 1962 the taxpayer claimed depreciation on the cost values of the following four items-

   (a)  Aluminium sun louvres                    $116,000
   (b)  Parquetry flooring                        $39,612
   (c)  Roller shutters                            $1,600
   (d)  Electrical installations, con-
        sisting of conduiting and
        wiring, switches and power
        points                                     $40,800
    

The Commissioner rejected the claim on the basis that none of the items is property, being plant or articles, within the meaning of sec. 54 of the Assessment Act 1936-1963. The taxpayer's subsequent objection was disallowed and the matter is now at its request before the Board.

2. At the commencement of the hearing the taxpayer's representative conceded that, in light of the judgment in
Imperial Chemical Industries of Australia and New Zealand Ltd. v. F.C. of T. 70 ATC 4024 the electrical installations were neither ``plant'' nor ``articles'' in terms of sec. 54. Accordingly we are concerned only with the first three of the above items.

3. Of the four walls of the building only the two facing east and west respectively have windows. The eastern and western walls are predominantly glass thus necessitating the provision of some form of shading from direct rays of sunlight. Shading for such buildings may be provided by hoods of any sort including concrete hoods constructed as projections of the building; other methods include double glazing combinations with venetians between. In the instant case the building was architecturally designed so that the eastern and western walls would be shaded by incorporating in the construction a system of louvres. Vertical mullions consisting of aluminium sections were affixed at spaced intervals to the eastern and western facades extending for the full height of the building above the ground floor. The mullions were affixed with steel brackets bolted to metal anchorages built into the concrete of the wall. Banks of six blades of louvres each twelve feet long were attached horizontally to the facade on each side of a mullion in such a position that the blades would shade the glass at each floor level. Each blade was made of a hollow length of aluminium 16'' wide by 1 ⅞" deep. Each bank of blades shading a floor can be tilted for the most effective shading by operating a winding mechanism with a handle on the inside of the wall.

4. There is no doubt on the evidence that the louvre system is a sun control feature of the building to stop the rays of sunlight penetrating into the interior. Nor does the evidence leave any doubt that without the louvres the air conditioning plant in the building would have to be one of greater capacity. Nevertheless we are unable to accept the submission for the taxpayer that the louvre system is a composite part of the air conditioning system and is therefore ``plant'' in terms of sec. 54. The evidence of experts is that the design of an air conditioning system is preceded and affected by findings made on investigation of the shading to be provided for such a building as that in question. But it is also clear on the evidence that the design and capacity of an air conditioning plant is affected by the materials used in constructing the roof, walls and facade generally; by the thickness of the walls; by the type and placement of windows; and by other factors in design and construction such as the number

---

ATC 337

of doors or other openings which allow ingress of outside air into a building.

5. On the evidence we find that the mullions and louvres are an integral part of the design and construction of the building. If they had not been included the whole external design of the building would have been quite different from what it is. They are as much integral parts of the taxpayer's building as Kitto J. held the special acoustic ceilings to be in the I.C.I. case, supra. Accordingly in our opinion the mullions and louvres are not ``plant''. The louvre system is part of an integrated whole and as such it has no identity of its own sufficient to justify its being characterised as an ``article'' in terms of sec. 54. The taxpayer's claim for depreciation therefore fails.

6. Parquetry flooring was laid through the office areas on all floors of the building but not in the main lift lobbies. The parquetry came in 4½" squares of jarrah timber each comprising six slats with a thickness of ⅜". These squares or tiles were bonded to the smooth finished concrete floor probably with a latex-type mastic. A parquetry manufacturer expressed the opinion that the useful life of such flooring ends when the timber is worn to one-half of its original thickness. The lasting quality of the floor depends on the traffic load and the hardness of the timber used. The manufacturer thought the subject floor would have a life of up to twenty years. On the other hand an architect expressed the opinion that if the floor was reasonably maintained by replacing worn parts from time to time it would last as long as the building. Maintenance of such parquetry floors is done by levering up worn patches and laying new tiles or squares which must be sanded level with the surrounding parquetry. In substance the parquetry floor is a timber floor affixed to a concrete floor; it is simply a particular kind of floor and is as much an integral part of the building as a tongued and grooved timber floor laid across concrete beams. In our opinion the parquetry floor is no more ``plant'' than was the steel tile floor of the bakery the subject of decision by this Board in
15 T.B.R.D. 7 Case Q7.

7. The roller shutters are installed at entrances to the car park within the building. Like any other doors controlling entrance to the building they are integral parts of it and we regard them as being neither ``plant'' nor ``articles'' for the purposes of the depreciation provisions.

8. For the given reasons we would uphold the Commissioner's decision on the objection and confirm the assessment that is before us.

Claim disallowed