BHARAT DIAMOND BOURSE,MUMBAI vs. DCIT (E)- 1(1), MUMBAI
Before: SHRI SAKTIJIT DEY, V.P. & SHRI GIRISH AGRAWAL, AM
Per Saktijit Dey, VP:
Captioned appeal by the assessee arises out of order dated 28.02.2024 of learned First Appellate Authority pertaining to Assessment Year (AY) 2009-10. 2. The core issue arising for consideration as per concise grounds of appeal of the assessee is as under:
“Whether the proviso to Section 2(15) of the Income Tax Act, 1961
(hereinafter called the ‘Act’) disentitles the assessee from availing exemption under Sections (u/s.) 11 and 12 of the Act.”
2
AY 2009-10
Bharat Diamond Bourse
Before we delve into the issue in dispute, it is necessary to provide a brief background of the assessee and its activities. Initially, the export of diamond from India to abroad was unorganized. Therefore, the diamond exporters in India came together and formed Diamond Exporters Association for facilitating export of diamond. Subsequently, the diamond exporters found that there was need for setting up a diamond bourse in Bombay with customs clearance facilities for facilitating export of diamond and make trade more competitive in the international market. After deliberating on the request made by the Diamond Exporters Association, the Central Government, in 1984, accepted the proposal to set up a diamond bourse in Bombay. The Minerals and Metals Trading Corporation of India Ltd. (MMTC), a Central Government undertaking, agreed to coordinate the administrative steps. As per the suggestion of the Ministry of Commerce, Government of India, the bourse was named as ‘Bharat Diamond Bourse’. Thus, a decision was taken by the Government of India in the Ministries of Finance and Commerce to set up ‘Bharat Diamond Bourse’ with the object of encouraging and increasing the export of polished diamond from India. 4. Mumbai City (erstwhile Bombay), traditionally had been the headquarters of diamond trade and exports. However, the main business center for diamond trade was located in a congested locality. Whereas, the International Airport in Mumbai was situated at a far-off place in Sahar, Andheri, in North Bombay. The long distance between the center of activity and International Airport made it highly inconvenient and cumbersome for operations of the diamond export trade from the point of view of transportation, security and customs clearance. Therefore, with the concurrence of Central Government, it was decided to set up a customs clearance facility at Diamond Plaza near Opera House as a custom area for the purpose of storage and clearance of diamond for import/export. Since, diamonds and valuable gems are imported and exported in small packets in large quantities and have to be transported long distance involving high degree of security risk, an application was moved before the