Income, profits not commensurate with operations in India: CBDT on I-T survey on BBC

The tax body said that I-T teams unearthed crucial evidences by way of statement of employees, digital proof and documents

After conducting three-day long “surveys” on offices of the British Broadcasting Corporation (BBC) in New Delhi and Mumbai, the Income Tax Department on Friday said it has gathered several pieces of evidence pertaining to the operation of the organisation which indicates tax evasion.

The survey revealed that despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities are not commensurate with the scale of operations in India, according to a statement released by the union finance ministry.

The I-T department had launched the survey exercise on February 14 at BBC offices in Delhi and Mumbai and it ended after about 60 hours on Thursday night. The CBDT is the administrative authority for the tax department.

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“The survey has also thrown up several discrepancies and inconsistencies with regard to Transfer Pricing documentation,” the ministry said without naming the media organisation.

The discrepancies found by the I-T Department relate to level of relevant Function, Asset and Risk (FAR) analysis, incorrect use of comparables that are applicable to determine the correct Arms Length Price (ALP) and inadequate revenue apportionment, among others.

The ministry said the survey operation was conducted in a manner to facilitate continued regular media/channel activity.

The Income Tax survey started at the BBC offices in New Delhi and Mumbai on February 14. The Department ended the survey on Thursday night after nearly 58 hours of action.

According to the official statement, the survey operation has resulted in unearthing of crucial evidence by way of statements of employees, digital evidence and documents which will be further examined in due course.

Statements of those employees were recorded whose role was crucial including those connected to, primarily, finance, content development and other production-related functions.

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“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,” the finance ministry noted in the statement.

During the course of the survey, the Department gathered several evidences 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, it said.

The BBC, after tax teams left their premises on Thursday, said they will "continue to cooperate with the authorities and hope matters are resolved as soon as possible."

The survey prompted Opposition parties to denounce the I-T department action as they termed it "political vendetta".

The BJP had accused the BBC of "venomous reporting" while the Opposition had questioned the timing of the action that came weeks after the broadcaster aired a two-part documentary, "India: The Modi Question", on Prime Minister Narendra Modi and the 2002 Gujarat riots.