BBC ‘survey’: Amid a row that erupted following the Income Tax department raid on BBC, the tax authorities released a statement on Friday, where it claimed that the organization indulged in income and profit tax irregularities. Link1
The raid which has been touted as a “survey” by the sleuths, said that the income and profits shown by various BBC group entities are not commensurate with the scale of their operations in India. Link2
Read: BBC offices in Delhi, Mumbai searched by Income Tax department amid row over its documentary on PM Modi
Not working as per law of the land: IT
According to an official statement on Friday, it claimed that the investigators found 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. Link3
Further, during the course of the ‘survey’, it claimed that the department gathered evidence pertaining to the operation of the organization which indicates 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. Link8
Furthermore, the I-T department claims that the services of seconded employees were 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,” according to the statement. Link4
The ‘survey’ has 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 comparable which are applicable to determine the correct Arms Length Price (ALP) and inadequate revenue apportionment, among others, as per the Income Tax statement. Link5
IT dept found crucial evidence
The department claimed it unearthed crucial evidence, including 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 included those connected to, primarily, finance, content development and other production-related functions. Link6
“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,” as per the statement. The department claimed despite the survey operation, it was ensured that the organisation could facilitate regular media/channel activity. Link7
Also Read: Income Tax department’s survey at BBC offices| What we know so far
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