A day after the Income-Tax Department completed its 60-hour-long survey against British Broadcasting Corporation (BBC) offices in Delhi and Mumbai, the department said that it has “uncovered irregularities” in the accounting books of the UK-based media company.
On Friday, February 16, the I-T department said that the BBC is engaged in the business of developing content in English, Hindi and various other Indian languages; advertisement sales and market support services, etc.
“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,” the IT department said.
It further said that during the course of the survey at the offices of BBC, the department has gathered “several pieces of evidence pertaining to the operation of the organisation that indicate that tax has not been paid on certain remittances that have not been disclosed as income in India by the foreign entities of the group”.
“The survey operations also revealed that the 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,” it alleged.
The IT department also alleged that the survey had also thrown up several “discrepancies and inconsistencies with regard to Transfer Pricing documentation”.
“Such discrepancies relate to the 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,” it said.
The IT department further said that its survey operation has resulted in the “unearthing of crucial pieces of evidence by way of statements of employees, digital evidence and documents”, which will be further examined in due course.
The IT department also clarified that only the statements of those employees were recorded whose role was crucial, including those connected to, primarily, finance, content development and other production-related functions.
“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 or agreements sought,” it said, adding that despite the stance of the group, the survey operation was conducted in a manner so as to facilitate continued regular media or channel activity.
Around 15-20 sleuths from the IT department arrived at BBC offices in Delhi and Mumbai on Tuesday morning at around 11.30 am. They left the premises on Thursday night around 10.30 pm after over 60 hours.
The development comes days after the BBC aired a two-episode documentary on the 2002 Gujarat riots, the revocation of Article 370 and anti-CAA and NRC protests in India targeting the ruling BJP.