Judgment :- 1. At the instance of the Revenue, the following question of law has been referred by the Income-tax Appellate Tribunal for the decision of this Court: "Whether, on the facts and in the circumstances of the case, the assessee is engaged in 'a cottage industry' and is entitled to the relief under S.80P(2)(a)(ii) of the Income Tax Act, 1961?" The respondent/ assessee is a co-operative society engaged in the manufacture and sale of handloom cloth. The members of the society are eighty artisans weaving handloom cloth. The society purchases raw materials for the manufacture of cloth and entrusts the materials to the workers who carry out the work is thatched shed, belonging to the society. The looms are kept in a thatched shed. The members are remunerated at piece rates. They are also provided with bonus and other compensation. The plea of the assessee is that it is entitled to the benefit of S.80P(2)(a)(ii) of the Income Tax Act and is entitled to deduction. The plea was put forward before the Appellate Assistant Commissioner, for the first time. It was negatived. In appeal, the Appellate Tribunal held that the respondent/ assessee is entitled to the relief under S.80P(2)(a)(ii) of the Income-tax Act, on the basis that "it is a co-operative society engaged in a cottage industry." The Revenue filed an application under S.256(1) of the Income-tax Act for referring the question of law, which according to it, arose cut of the appellate order of the Tribunal, and that is how the question extracted herein above has been referred by the Appellate Tribunal for our decision. 2. We heard counsel for the Revenue, Mr. N. R. K. Nair, as also counsel for the assessee, Mr. C.M. Devan. Mr. Nair contended that the work is carried on by the weavers not in their respective homes but in a thatched shed provided by the society. It is also stated that the operation is carried on by the society in a large and organised manner. So, it is not a "cottage industry". Reliance was placed on the decision of the Bombay High Court reported in Co-operative Typewriter Services Ltd. v. CIT (118 ITR 512). 3. There is no substance in the above plea. It is also stated that the operation is carried on by the society in a large and organised manner. So, it is not a "cottage industry". Reliance was placed on the decision of the Bombay High Court reported in Co-operative Typewriter Services Ltd. v. CIT (118 ITR 512). 3. There is no substance in the above plea. In Webster's Third New International Dictionary, the word 'cottage industry' has been specified thus: "An industry based upon family unit as a labor force in which workers' using their own equipment at home process goods usu. belonging to a merchant employer and supplement their income from small agricultural holdings." Briefly stated, the cottage industry is one carried on by persons in their homes. But, we have to understand the said phrase in the context of the Income lax Act and in the background of S.80P of the Act. S.80P(1) provides that in computing the taxable income of a co-operative society there shall be deducted the sums specified in sub-s. (2). Sub-s. (2)(a)(ii) specifies that the sums referred to in sub-s. (1) in the case of co-operative society engaged in a cottage industry is one of those items which will be entitled to deduction. In Addl. Commissioner of Income-tax v. Hastkala Pital Udyog Sahkari Samiti Ltd. [(1978) 114 ITR 723 at p. 726], the Allahabad High Court stated thus: "Primarily a cottage industry is carried on by families in their own dwelling houses, but when the term "cottage industry" is applied to a co-operative society, the idea of a family does not fit in. A co-operative society can a way be likened to a family constituted by its members; so where the members of a co-operative society are engaged in the manufacture of goods in their cottages or dwelling houses, it can be said that a family constituted by its members is engaged in a cottage industry." As stated by Sam path Iyengar-Law of Income Tax, Vol. 3, page 2852: "In the context in which the exemption is granted by this provision, the concept of 'cottage industry cannot be limited to industry 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." In CIT v. Chichli Brass Metal Workers Co-operative Society (114 ITR 720), it was held that in a case where a co-operative society did not engage any outside labour but engaged only its own members for the manufacture of goods in the premises of the society by using wooden hammers, it was a "cottage industry" within the meaning of S.80P of the Income Tax Act. In this case, it has been found by the Appellate Tribunal that the society is engaging 80 artisans who are members of the society themselves and they were working only in the thatched shed belonging to the society. 4. In the light of the above, we are of the view that the Appellate Tribunal was justified in holding that the respondent/ assessee, a co-operative society, is engaged in a cottage industry and is entitled to the benefit of S.80P(2)(a)(ii) of the Income Tax Act. 5. It remains to consider the decision of the Bombay High Court in the case reported in Co-operative Typewriter Services Ltd v. CIT (118 ITR 512) on which heavy reliance was placed by counsel for the Revenue. In that case, some retrenched employees of a company carried on servicing Typewriting machines and other activities by forming a co-operative society. The facts of the case showed that substantial servicing was done at the premises of the customers also. It was further found that no activity was being carried on at or near the homes of the members comprising the assessee-society. In the said background, the Bombay High Court held that the society was rot engaged in a "cottage industry" and the income of society was not entitled to exemption. The facts in the said case are entirely different and aredistinguishable. We are of the view that the said decision cannot be of any help to the Revenue to deny the exemption pleaded by the assessee. 6. In the result, we held that the decision of the Appellate Tribunal is justified in law. We answer the question, referred to us, in the affirmative in favour of the assessee and against the Revenue. 7. Initially, the Revenue had formulated two questions in the application filed under S 256(1) of the Income Tax Act. 6. In the result, we held that the decision of the Appellate Tribunal is justified in law. We answer the question, referred to us, in the affirmative in favour of the assessee and against the Revenue. 7. Initially, the Revenue had formulated two questions in the application filed under S 256(1) of the Income Tax Act. The Appellate Tribunal has referred only question No. 2, for the decision of this Court. Question No.1 centered round the plea of the Revenue that the claim made by the assessee under S 80(P)(2)(a)(ii) was raised for the first time only before the Appellate Assistants Commissioner and hence it should not and could not, have been entertained. This question was based on the decision of the Supreme Court in Addl. Commissioner of Income-tax v. Gurjargravures P. Ltd. (111 ITR 1). Since this question was not referred by the Appellate Tribunal, the Revenue filed OP No. 7014 of 1982-S. Subsequently, the said OP was withdrawn. That is why we are concerned with the only question that has been referred to us by the Appellate Tribunal, for our decision. 8. The Income Tax Referred case is disposed of, as above. A copy of this judgment, under the seal of this Court and the signature of the Registrar, shall be forwarded to the Income Tax Appellate Tribunal, as required by law.