CBDT on BBC Survey: Income Tax Dept carries out searches at Mumbai, Delhi offices, finds discrepancies in tax filing terms

A day after they ended a three-day-long survey operation against BBC group entities, the income tax authorities said Friday that the income and profits shown by the British media organization are "not commensurate" with the scale of their operations in India and tax has not been paid on certain remittances by its foreign entities.

Authorities informed that the survey was conducted under section 133A of the Income-tax Act, 1961 (the Act) at the business premises of BBC in Delhi and Mumbai. After the survey, CBDT said that despite substantial consumption of content in various Indian languages (apart from English), the "income/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 several pieces of evidence pertaining to the operation of the organization and said that these indicate that taxes have not been paid on certain remittances which have not been disclosed as income in India by the foreign entities of the group.

The survey operations also revealed that services of seconded employees have been utilized 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, the Central Board of Direct Taxes (CBDT) said.

Further, the department stated that the survey has 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.

The official release stated that the survey operation has resulted in the unearthing of crucial evidence by way of statements 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.

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, CBDT said.

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