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2011 (8) TMI 1084 - ITAT CHENNAIDeduction under section 80-P(2)(a)(ii) - reason pointed out by AO to deny the benefit of cottage industry to the assessee is that the size of the assessee’s establishment is too big that it employed more than 2000 workers; its turnover are crores and crores of rupees and it is a very big co-operate society engaged in producing handloom goods etc. - Held that:- These objections raised by the Assessing Officer on the size and extent of the operation of the assessee-society are legally valid to disqualify the assessee from the category of cottage industry for the purpose of the Income-tax Act, 1961. The Industrial Development and Regulation Act has classified the para meters necessary to qualify something as a cottage industry. The assessee is having the recognized status as a cottage industry under that Act. In normal sense, one should take the said recognition as the conclusive proof that the assessee is a cottage industry. This conclusive statutory proof is further strengthened by the fact that the assessee is working under the umbrella of the Commissioner of Handloom and Textiles, Government of Tamilnadu and obtaining various concessions like subsidies, rebates etc. in promoting the sale of its products. These concessions and facilities are given both by the State and Central Governments to protect the employment and interest of traditional workers and artisans in different fields of cottage industries. Handloom is a traditional industry in India deploying a large number of workers.As a matter of fact, it is to be stated that the Central and State Governments are promoting such societies to develop and expand the area of operation of cottage industries. When the assessee has grown itself into a big institution, it shows that the assessee is in fact, following the policies declared by the State and Central Governments. Since the society is performing well, it is able to expand and provide more and more employment to traditional handloom workers. We agree with the Commissioner of Income-tax (Appeals) that the assessee-society is entitled for the benefit of exemption under sec.80P(2)(a)(ii) of the Income-tax Act, 1961
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