B.P. Saraf, J.
1. By this reference under Section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion at the instance of the Revenue : 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that additions of Rs. 2,30,786 were additions to plant and machinery and not to furniture and fittings ?'
2. The assessee-company manufactures pharmaceuticals. In the assessment year 1976-77, the assessee claimed depreciation at the rate of 100 per cent, under Section 32(l)(ii) of the Income-tax Act, 1961 ('the Act'), on the amount of Rs. 2,42,084 spent on light fittings, fluorescent fittings, strip light fittings, frames for light fixtures, installations/wiring for lighting, installation of call bell, indicators/buzzers/door locks, etc., on the ground that it amounted to addition to plant and machinery and the cost of each one of the additions did not exceed Rs. 750. The Income-tax Officer did not accept the above contention of the assessee as he was of the opinion that none of the items mentioned above could be regarded as plant. All these items, according to him, were mere fittings. He, therefore, allowed depreciation at the rate of 10 per cent, which was the rate applicable to furniture and fittings. Aggrieved by the order of the Income-tax Officer, the assessee appealed to the Commissioner of Income-tax (Appeals), who restored the matter to the Income-tax Officer of each item afresh. In compliance with the directions of the Commissioner of Income-tax (Appeals), the Income-tax Officer reconsidered the claim of the assessee in respect of each item of expenditure and allowed 100 per cent, depreciation under Section 32(l)(ii) of the Act on certain items, the aggregate value of which came to Rs. 12,120. Regarding the balance amount of Rs. 2,30,716, he observed that it was spent on light fittings, fluorescent fittings, strip lightfittings, frames for light fixtures, installation/wiring for light fixtures, installation/wiring for lighting, installation of call bell indicators/buzzers/ door locks, etc. He was of the opinion that all these items met the description of electrical fittings and could not be regarded as plant. He, therefore, allowed depreciation thereon at the rate of 10 per cent. The assessee again appealed to the Commissioner of Income-tax (Appeals) who agreed with the finding of the Income-tax Officer and dismissed the appeal. The asses-see appealed to the Income-tax Appellate Tribunal ('the Tribunal'). The Tribunal held that light fittings, etc., were 'plant' and hence eligible for depreciation at the rate of 100 per cent, under Section 32(1)(ii) of the Act. The Tribunal, therefore, allowed the appeal of the assessee. Hence, this reference at the instance of the Revenue.
3. We have heard Mr. R. V. Desai, learned counsel for the Revenue. We have also heard Mr. J. Jain, learned counsel for the assessee. Section 32(1)(ii) of the Act, as it stood at the material time, so far as relevant, reads as follows :
'32. Depreciation.-(1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed-. . .
(ii) in the case of buildings, machinery, plant or furniture, other than ships covered by clause (i), such percentage on the written down value thereof as may in any case or class of cases be prescribed :
Provided that where the actual cost of any machinery or plant does not exceed seven hundred and fifty rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession :'
4. It is clear from a plain reading of the first proviso to Section 32(1)(ii) that where the actual cost of any machinery or plant does not exceed Rs. 750, the actual cost is allowable as a deduction in the accounting year in which the machinery or plant is installed or put to use by the assessee for the purposes of his business. In other words, in respect of minor items of machinery and plant each costing not more than Rs. 750, depreciation is allowed at the rate of 100 per cent, in the very first year. This proviso, however, applies only to plant and machinery and not to furniture and fittings. On furniture and fittings, the assessee will be entitled to depreciation at the rate prescribed by Rule 5 read with Part I of Appendix I to the Income-tax Rules, 1962 ('the Rules'), which is 10 per cent. Thus the rate of depreciation on 'fittings' is 10 per cent, irrespective of the cost of each item because the first proviso to Section 32(1)(ii) does not apply to furniture and fittings. The question that falls for determination is whether the fittings of various description including light fittings are 'fittings' within the meaning of item II of Part I of Appendix I which deals with rate of depreciation on 'furniture and fittings' or 'plant' referred to in the first proviso to Section 32(1)(ii) of the Act.
5. We have given our careful consideration to the above controversy. 'Plant' as such has not been defined in the Act. Section 43(3) of the Act merely contains an inclusive definition which says that plant shall include ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession. Obviously it is an inclusive definition. Its intention is to enlarge the meaning of the expression 'plant' occurring in the Act to include not only such items as are commonly known as 'plant' but also those which are enumerated therein. To decide whether a particular item is plant or not, one of the tests applied is the 'common parlance or trade or commercial parlance' test. Another test that is often applied for that purpose is the 'functional test'. In common parlance electrical fittings, etc., of the type which are the subject-matter of dispute in this case are never regarded as 'plant'. They are ordinarily described and referred to as 'fittings'. Even applying the dictionary meaning test, these items cannot be regarded as 'plant'. In the Oxford Advanced Learner's Dictionary 'fittings' has been described as (1) small standard part or component ; electrical fittings or stainless-steel light fittings. (2) items, such as cooker and shelves, that are fixed in a building but can be removed when the owner moves house ....
6. The items in the present case meet the above description of 'fittings'.
7. We are supported in our above conclusion by the decision of the House of Lords in Cole Bros. Ltd. v. Phillips  55 TC 188. In that case the controversy was whether lighting and other apparatus installed in shop premises qualified as 'plant' within the meaning of Sections 40 and 41 of the English Finance Act, 1971. The Revenue held it not to be plant. The Court of Appeal affirmed this view. It drew a distinction between plant and setting and held that on the facts of the case, the lighting and other apparatus installed in the shop premises did not qualify as 'plant' but formed part of the 'setting'. While saying so it was observed that in deciding whether the expenditure on a particular item is allowable as expenditure on plant, the question which the court must ask itself is whether the particular subject-matter under consideration either itself performs, or is a necessary or integral part of that which performs, simply and solely the function of 'housing' the business, or whether, as its sole function or as its additional function, it performs some other distinct business purpose. A distinction was drawn between 'plant' and 'setting' and on the facts of the case, it was held that the lighting and other apparatus installed in the shop premises did not qualify as 'plant' but formed part of the 'setting'. On appeal, the House of Lords reaffirmed the distinction between 'plant' and 'setting' and dismissed the appeal.
8. Reference may also be made in this connection to the decision of the Court of Appeal in Wimpy International Ltd. v. Warland  61 TC 51. In that case, it was held that to decide whether any item is plant, the question to be asked is what does the item function as Is it more appropriate to describe the item as part of the premises rather than having retained a separate identity If the item forms part of the premises, it is not plant.
9. It is clear from the above discussion that in the facts and circumstances of the present case, electrical fittings and other apparatus like call bell, indicators, etc., installed by the assessee did not qualify as 'plant' but formed part of the setting. They meet the description of 'fittings'.
10. We are, therefore, of the clear opinion that the Tribunal in this case was not justified in holding that the light fittings, fluorescent fittings, strip light fittings frames for light fixtures, installation/wiring for lighting, installation of call bell indicators/buzzers/door locks, etc., were 'plant' and allowing depreciation at the rate of 100 per cent, thereon under the first proviso to Section 32(1)(ii) of the Act. In our opinion, the Income-tax Officer was right in holding that these items did not qualify as 'plant' but were additions to fittings and allowing depreciation thereon at the rate of 10 per cent, which was the rate applicable to the 'furniture and fittings'.
11. The question referred to us is answered in the negative, that is, in favour of the Revenue and against the assessee. The reference is disposed of accordingly with no order as to costs.