Tax discrepancies found during survey at BBC premises, says I-T Department

A day after completing its three-day "survey operations" at BBC's premises in Delhi and Mumbai, the Income Tax department on Friday said that it was revealed that the "despite substantial consumption of content in various Indian languages (apart from English), the income or profits shown by various group entities is not commensurate with the scale of operations in India".

During the course of the "survey", the department gathered evidence pertaining to the operation of the organisation (BBC) which indicate that tax has not been paid on certain remittances, which have not been disclosed as income in India by foreign entities of the group. it said.

The Income Tax Department's "survey operations" also revealed that services of seconded employees have been utilised, for which reimbursement has been made by the Indian entity to the foreign entity concerned.

"Such remittance was also liable to be subject to withholding tax, which has not been done. Further, the survey has also thrown up several discrepancies and inconsistencies with regard to transfer pricing documentation. Such discrepancies relate to level of relevant function, asset and risk (FAR) analysis, incorrect use of comparables which are applicable to determine the correct arms length price (ALP) and inadequate revenue apportionment, among others," a statement issued by the department said.

The "survey operation" has resulted in unearthing of crucial evidences by way of statement of employees, digital evidence, and documents which will be further examined in due course. It is pertinent to state that statements of only those employees were recorded whose role was crucial including those connected to, primarily, finance, content development, and other production related functions.

As per the statement, even though the department exercised due care to record statements of only key personnel, it was observed that "dilatory tactics" were employed including in the context of producing documents and agreements sought. Despite such a stance of the group, the survey operation was conducted in a manner so as to facilitate continued regular media and channel activity, the Income Tax Department said.

The "survey operation" by the Income Tax Department was conducted in the Delhi and Mumbai offices of BBC between February 14-16. It was carried out under section 133A of the Income Tax Act, 1961, the statement added.

The survey took place just weeks after BBC had released a two-part documentary titled "India - The Modi Question", which focussed on post-Godhra riots in Gujarat when Prime Minister Narendra Modi was the state's Chief Minister in 2002.

The documentary had evoked sharp reactions from the government and was been taken down from several social media platforms. The opposition has deplored the government's move, calling it "political vendetta".