TMI Blog2014 (9) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... finition of 'cottage industry' in the Income Tax Act, the Tribunal was fully justified in accepting the recognition of the assessee as cottage industry by the Central as well as the State Governments - no further document is required to be submitted by the assessees to prove that they are cottage industries. Section 80-P does not speak about any particular type of cottage industry. It is an inclusive definition - There is no sub-classification - what the statute provides u/s 80-P, cannot be taken away by means of an administrative circular – relying upon Commissioner of Central Excise, Bolpur Vs - M/s. Ratan Melting & Wire Industries [2008 (10) TMI 5 - SUPREME COURT OF INDIA] - what is provided under the statute cannot be denied by means of a circular and, thereby, deny the benefit to the assessees. The mere reason that the size of the industry is big and there are large number of workers employed, is no reason to deny the assessees the benefit available to them u/s 80-P of the Act, when there is no specific embargo imposed under the Act - as long as the assessees are cottage industries, they would be entitled to the benefit of Section 80-P of the Act - No further fetters, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals), was allowed holding that the assessees are eligible to claim deduction. 5. The Revenue, aggrieved by the said order of the Commissioner of Income Tax (Appeals), preferred appeals before the Tribunal. The Tribunal held that the assessees are duly recognised as cottage industries by the competent authorities under the various provisions of the relevant Act and also taking note of the earlier decisions of the Tribunal in ITA No.422/Mds/2011 dated 26.8.2011 for the assessment year 2007-2008 and ITA Nos.2004, 2005 2006/Mds/2011 dated 12.6.12 for the assessment year 2008-2009, came to the conclusion that the assessees have clearly made out a case that they are co-operative societies and, consequently, entitled to the benefit of Section 80 P (2) (a) (ii) of the Income Tax Act. While coming to the above conclusion, the Tribunal held that the term cottage industry is not defined anywhere in the Income Tax Act and the said classification is available only under the Industrial Development and Regulation Act and further held that the assessee is getting all other favours and concessions both from the Central and State Governments and in view of their recognition u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employment and interest of traditional workers and artisans in different fields of cottage industries. Hand loom is a traditional industry in India deploying a large number of workers. The hand loom provides substantial amount of employment to rural population and hand loom is a great contributor to the rural economy. After examining all these aspects of the case, the Tribunal held that the Commissioner of Income-Tax (Appeals) in that case was justified in granting benefit of exemption under Sec. 80P (2) (a) (ii). The above view of the Tribunal has been followed in another set of appeals disposed off by the Income Tax Appellate Tribunal, Chennai 'D' Bench for the assessment year 2008-09 through their order dated 12.6.2012 in ITA Nos.2004, 2005 2006/Mds/2011. 6. Therefore, it is seen that the issue has been decided in favour of the assessee-societies for the earlier assessment years in a consistent manner. In these circumstances, we find that the Commissioner of Income-Tax (Appeals) is justified in accepting the claim of deduction made by the assessees in all these cases. Accordingly, the orders of the Commissioner of Income-Tax (Appeals) are upheld. 7. In result, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, is extracted hereinbelow for easy reference :- 3. What constitutes a 'cottage industry' has been the subject-matter of discussion in a number of cases decided by various Courts. Based on the ratio of these decisions, a co-operative society engaged in cottage industry is required to satisfy following criteria for availing benefits under Section 80P (2) (a) (ii) of the Income-Tax Act, 1961 :- (a) a cottage industry is one which is carried out on small scale with a small amount of capital and a small number of workers and has a turnover which is correspondingly limited; (b) it should not be required to be registered under the Factories Act; (c) it should be owned and managed by the co-operative society; (d) the activities should be carried on by the members of the society and their families. For this purpose, a family would include self, spouse, parents, children, spouses of the children and any other relative who customarily lives with such a member. Outsiders (i.e., persons other than members and their families) should not work for the society. In other words, the co-operative society should not engage outside hired labour; (e) a member of co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of Income Tax Act, in the absence of specific definition of 'cottage industry' in the Income Tax Act, the Tribunal was fully justified in accepting the recognition of the assessee as cottage industry by the Central as well as the State Governments. In view of the above position, this Court is of the considered view that no further document is required to be submitted by the assessees to prove that they are cottage industries. 12. Section 80-P provides for deduction in respect of income of co-operative societies and the said section has not laid down any specific conditions or imputations to qualify as such. However, by virtue of a circular, which learned standing counsel for the appellant has relied upon, the Department is trying to import something, which is not found in the main provision. Further, from the circular produced by the appellant, we find that the same is in respect of Weavers' Co-operative Society. Section 80-P does not speak about any particular type of cottage industry. It is an inclusive definition. There is no sub-classification. In any event, as held by the Supreme Court as well as the High Courts in catena of decisions, what the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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