The Income Tax Department on February 17, 2023, alleged that its survey at the Delhi and Mumbai offices of the British Broadcasting Corporation (BBC) revealed multiple irregularities, including non-payment of tax on certain remittances that were not disclosed as income in India.
The three-day survey at the offices concluded on Thursday.
Stating that the survey action was carried out under Section 133A of the Income Tax Act, the agency said it revealed that despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities was not commensurate with the scale of operations in India.
Also read |Brazen intimidation: On the tax survey on the BBC
“During the course of the survey, the Department gathered several evidence pertaining to the operation of the organisation which indicate that tax has not been paid on certain remittances which have not been disclosed as income in India by the foreign entities of the group,” said the agency in a statement.
According to the Department, it also found that services of seconded employees [staff internally transferred on a temporary basis] had been used, for which reimbursement was made by the Indian entity to the foreign entity concerned. “Such remittance was also liable to be subject to ‘withholding tax’ [the amount employer deducts from the employee’s salary and pays to the government as the individual’s tax liability], which has not been done...the survey has also thrown up several discrepancies and inconsistencies with regard to Transfer Pricing documentation,” it said.
Also read | Aware of BBC raid, cannot offer any judgement: U.S.
The agency said such “discrepancies” related to the 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”.
It also claims to have unearthed “crucial evidence” by way of statements of employees, digital evidence and documents which would be further examined in due course. “...statements of only those employees were recorded whose role was crucial including those connected to, primarily, finance, content development and other production related functions,” said the Department.
“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/agreements sought. Despite such a stance of the group, the survey operation was conducted in a manner so as to facilitate continued regular media/channel activity,” it added.
The group is engaged in the business of development of content in English, Hindi and various other Indian languages; advertisement, sales and market support services, etc.
A BBC Spokesperson said: “The Income Tax Authorities have left our offices in Delhi and Mumbai. We will continue to cooperate with the authorities and hope matters are resolved as soon as possible.
“We are supporting staff – some of whom have faced lengthy questioning or been required to stay overnight – and their welfare is our priority. Our output is back to normal and we remain committed to serving our audiences in India and beyond.
“The BBC is a trusted, independent media organisation and we stand by our colleagues and journalists who will continue to report without fear or favour.”
The BBC will respond appropriately to any direct formal communication received from the Income Tax Department, it said.
