- (1.) Heard learned Counsel on both sides.
(2.) Assessee-Society is an Apex Society. It carries on the activity of manufacturing of cloth by supplying raw- material, i.e., yarn, to the weavers, who are the members of the primary societies, which, in turn, are the members of the Assessee-Society. The weavers produce cloth strictly in accordance with the directions given and under the control of the assessee. The assessee pays weaving charges to the weavers and thereafter markets and sells goods so produced. During the relevant assessment years, cloth was manufactured and sold under Janata Cloth Scheme of the Government of India. 3. For the relevant assessment years, the assessee claimed a deduction of Rs. 30,87,212/- under Section 80P(2)(a)(ii) and Section 80P(2)(a)(vi) of the Income Tax Act, 1961 ['Act', for short].
(3.) The narrow question which arises for determination in these cases is - whether the assessee-Society could be said to be engaged in a Cottage Industry under Section 80P(2)(a)(ii) of the Act or whether it could be said to be engaged in the collective disposal of labour of its members under Section 80P(2)(a)(vi) of the Act;