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TMI Blog1978 (3) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... . Civil Case No. 233 of 1973 relates to the assessment year 1966-67. The question of law referred to the High Court in both the references is identical. It is as follows : " Whether, on the facts and in the circumstances of the case, it can be said that the assessee-society was engaged in 'cottage industry' and that the income from manufacture and sale of brass utensils was exempt under section 81(i)(b) of the Income-tax Act, 1961 ? " The facts found are that the assessee is a co-operative society registered under the Madhya Pradesh Co-operative Societies Act, 1960. The society is assessed in the status of an " association of persons ". The business of the society is manufacturing brass vessels. The membership of the society varied from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In the context in which the exemption is granted by section 81 of the Act, the concept of " cottage industry " cannot be limited to industries carried on by families in their cottages and Parliament must be taken to have widened the concept to bring within it an industry carried on by a society with the co-operation of its members in the premises of the society. A co-operative society can be regarded as a family consisting of its members and the premises belonging to the society can be regarded as its home or cottage. The society with which we are concerned here does not engage any outside labour. The members themselves manufacture the utensils in the premises of the society by using wooden hammers. In our opinion, the society is engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e industry, it does not cease to be so simply because the premises in which it is carried on is a " factory " as defined by the Factories Act. The learned counsel places reliance on Dist. Co-operative Development Federation Ltd. v. Commissioner of Income-tax [1973] 88 ITR 330 (All) and District Co-operative Federation Ltd. v. Commissioner of Income-tax [1973] 87 ITR 639 (All). The societies concerned in these cases were engaged in manufacture of bricks by engaging a large number of workmen who were not members of the societies. These cases are, therefore, distinguishable on facts. For the reasons given above, we answer the question referred to us in the affirmative, in favour of the society and against the department. The assessee shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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