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Section 80P of the Income-tax Act, 1961 (Corresponding to section 14(3)(1)(b) of the Indian Income-tax Act, 1922) - Deductions - Income of co-operative societies - Assessment years 1960-61 to 1961-62 - Whether where assessee carried on business of manufacturing bricks through employment of hired labour force on large scale, activities of assessee could be termed as cottage industry so as to be eligible for deduction - Held, no FACTS The assessee carried on the business of manufacturing bricks at its brick kilns. It had a number of brick kilns and employed a large number of workers in the manufacture of bricks. The assessee claimed the benefit of section 14(3)(i)(b ) of the Indian Income-tax Act, 1922, on the ground that it was engaged in a cottage industry. The Tribunal held, agreeing with the ITO and the Appellate Assistant Commissioner, that the industry carried on by the assessee was not a cottage industry. On reference : HELD The definition in section 14(3)(i)(b) of 1922 Act shows that an industry to be cottage industry must utilise the labour force of the workers who use their own equipment and the process employed is also to be such which can be carried on in a cottage. The concept of "cottage industry" is different from the concept of industry in which employer and employees take part. A cottage industry is one which is carried on by the artisan himself using his own equipment with the help of the members of the family. It is the family unit which provides the labour force. The idea of cottage industry is alien to the idea of industry where hired labour is engaged and the relationship of employer and the employees exists. Applying this test, it could not be held that the industry carried on by the assessee was a cottage industry. In the instant case, it was not the case of the assessee that its members themselves carried on the manufacture of bricks. The bricks were manufactured through the employment of hired labour force and on a large scale, and hence the activity of the assessee could not be termed as 'cottage industry'. Consequently, order passed by the Tribunal was to be affirmed. Note: Decision in favour of the revenue. CASE REFERRED TO: District…

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