MUMBAI, JANUARY 28: Tired of bribing government officials to get even routine clearances? Most of us are but can do precious little since there's always someone who's willing to give a bribe. Well, the Bombay Customs House Agents Association (BCHAA), and six others across the country, including those in Delhi and Ahmedabad, think differently. They're going to have a ``managing committee'' which will enforce this code of conduct and will be authorised to suspend any members who give bribes!The BCHAA passed a formal resolution to this effect at its Extraordinary General Body Meeting on January 4. The resolution, a copy of which is with The Indian Express, says it had been ``resolved unanimously that all members and their employees direct their activity in such a manner so as not to infringe the provisions of Section 37 (1) of the Income Tax Act, 1961 and the Prevention of Corruption Act of 1988.''Essentially, Section 37 (1) allows deductions under miscellaneous categories, and this is thesection which Customs house agents use to claim deductions in income tax, showing bribe amounts paid as ``business expenses'' without, of course using the same terminology.The BCHAA then goes one step further in its proposal to cut back on bribes. The resolution adds: ``The Managing Committee is hereby directed to enforce the code of conduct and to take any other disciplinary action, including suspension of or expulsion from membership, against erring members.''The exercise of CHA associations endorsing the resolution got momentum after Cyrus Guzder, CMD of AirFreight Limited, said at a CII meeting in January that cargo clearing agents were tired of having to pay Customs staff and pay tax over and above for the same. He said the associations had decided that enough was enough. Guzder's stand was highly appreciated and a tete-a-tete was organised between him and the CVC. Vittal reportedly supported the move to pass such resolutions. Guzder is also a member of the managing committee of the Air CargoAgents Association of India.Other CHA associations which have adopted the same resolution include that of Calcutta, Cochin, Chennai and Bangalore.In the past, bribe amounts paid to Customs officials were neatly recorded in vouchers as ``payment to customs''; several Income Tax searches in the past have unearthed these amounts and deductions were disallowed. An Income Tax Appellate Tribunal (ITAT) order two years ago, in Mumbai, allowing expenditure on protection money paid by a builder, as a deduction then inspired a clarificatory amendment to Section 37 (1).The CHA resolution was circulated with the explanatory note to the amendment to Section 37 (1) as also the relevant portion of the proposed Prevention of Money Laundering Bill (which is still to be made into an Act). The note to Section 37 (1) is as follows: ``For the removal of doubts, it is hereby declared that any expenditure incurred by an assesee for any purpose which is an offence or which is prohibited by law shall not be deemed to havebeen incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.''Also circulated was the relevant portion of the Part V of the proposed Money Laundering Bill, which describes offences in Sections 7 to 10 dealing with offences of public servants taking gratification and the ingredients of influencing of a public servant.
