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Journalism of Courage
NEW DELHI, April 5: German tax laws allowing payment of commissions abroad for securing business deals might be an impediment for the Central Bureau of Investigation (CBI) probing into the allegations of bribery in the Rs 420-crore HDW submarine deal struck in 1987 by the Rajiv Gandhi government.
According to information submitted before the Delhi High Court by the petitioner, Dr B L Wadhera, the German tax law recognises miscellaneous expenditure, including expenses incurred on promotion of business or securing business by a company in Germany or abroad as `valid admissible business expenses’.
However, Wadhera said in his submission that the German law recognises bribing as a criminal offence. "Bribing someone abroad to secure business is a criminal offence because it promotes corruption," he said, quoting relevant provisions of the German law.
Wadhera had filed a public interest litigation in the High Court alleging that the CBI was dragging its feet in the matter and sought the court’s direction tothe investigating agency to speed up the probe.
He furnished the information before the court after the CBI counsel and the standing government counsel had submitted that they were yet to get the books on German tax laws which were not available here.
"There is no provision in the (German) Income Tax Act recognising the element of bribe money spent to secure business abroad," the papers submitted by Wadhera explained, adding, "Practically, when such moneys are paid abroad to secure business, the same are included in the general head of miscellaneous expenditure." Though the expenditure paid by way of commissions or bribes is not so specifically stated, it is included in the total expenditure by way of miscellaneous expenses. Generally, tax inspectors in that country recognise this element of expenditure as admissible, the papers said.
"If, however, such expenditure is beyond reasonable limit or promotion, the tax inspectors reach out to the company and ask for explanation. During such explanation, thecompany orally does inform the tax inspectors of the element of bribe money paid in another country to secure business.""But that is stated orally, not in writing. Tax inspectors after being informed of such expenses just ignore the same. The tax inspectors do not put such expenses on record," the papers said.
