Sukkah, Chapter 2, Mishnah 7. The Mishnah opens with a dispute between Beis Shammai and Beis Hillel:
"Mi shehayah rosho v'rubo ba'sukkah v'shulchano b'soch ha'bayis - Beis Shammai poslin u'Beis Hillel machshirin" - a person whose head and the greater part of his body are inside the sukkah, but the table he is eating at stands in the house and not in the sukkah. Beis Shammai rule that sitting this way is invalid, and Beis Hillel rule that it is valid.
Rashi explains the setting under discussion: in the time of the Gemara people would eat a formal meal while reclining, and with that in mind it is much easier to picture how a person's head and most of his body are in the sukkah while his table stands inside the house.
The two cases in the dispute:
The Gemara explains that Beis Shammai and Beis Hillel disagree about two different cases:
A large sukkah: the sukkah is valid in size and quite spacious, but the person is sitting right at the edge of the sukkah with his table inside the house. The question is whether such sitting should be invalidated out of concern that he will be drawn after his table to where it stands, so that his head and most of his body will no longer be in the sukkah but inside the house, and he will not have fulfilled the mitzvah of sukkah. Beis Shammai are concerned about this and invalidate it, while Beis Hillel are not concerned.
A small sukkah: a sukkah with room for no more than a person's head and the greater part of his body, with his table inside the house. Beis Hillel rule that it is valid, and Beis Shammai say that this is not a valid sukkah.
The proof brought by Beis Hillel:
The Mishnah records the exchange between the two sides. Beis Hillel, who rule that it is valid, said to Beis Shammai: "Lo kach hayah ma'aseh, shehalchu ziknei Beis Shammai v'ziknei Beis Hillel l'vaker es Rabbi Yochanan ben HaChoranis, u'metza'uhu shehayah yoshev v'rosho v'rubo ba'sukkah v'shulchano b'soch ha'bayis" - the elders of both academies found Rabbi Yochanan ben HaChoranis sitting in exactly this manner, and they said nothing to him. Even the elders of Beis Shammai did not object, and from here there is proof that all agree that such sitting is valid.
The response of Beis Shammai:
Beis Shammai rejected the proof and said: "Is that your proof?" - we have a different version of that very incident. The elders of Beis Shammai did in fact say to him: "If this is how you have been conducting yourself, you have never in your life fulfilled the mitzvah of sukkah," for sitting in this way, with one's head and most of one's body in the sukkah and one's table inside the house, is not a valid way of sitting in a sukkah.
In summary: in this Mishnah Beis Shammai and Beis Hillel disagree about the status of someone sitting with his head and most of his body in the sukkah while his table is inside the house - both in a large sukkah, because of the concern that he will be drawn after his table, and in a small sukkah that has room only for his head and most of his body. Beis Hillel brought a proof from the incident involving Rabbi Yochanan ben HaChoranis, whom the elders of both academies saw without protesting; Beis Shammai rejected the proof based on their own version, according to which they did protest and told him that he had never in his life fulfilled the mitzvah of sukkah.