BBC India survey indicated tax evasion on certain remittances, discrepancies in transfer pricing: Govt

New Delhi [India], February 17 : The Income Tax Department gathered several pieces of evidence pertaining to the BBC India's operation which indicated that taxes were not paid on "certain remittances" which have not been disclosed as income in India by the foreign entities of the group, a Central Board of Direct Taxes (CBDT) spokesperson said in a statement on Friday.
After three days, the income tax (I-T) department finished its survey at the offices of the BBC in Delhi and Mumbai on Thursday.
"A survey action under section 133A of the Income-Tax Act, 1961 (the Act) was carried out at the business premises of group entities of a prominent international Media Company at Delhi and Mumbai," the spokesperson said.
Section 133A of the Act enables an income-tax authority to enter any place of business or profession or charitable activity within its jurisdiction to verify the books of account or other documents.
The group, the spokesperson without taking name of the entity said, it is engaged in the business of development of content in English, Hindi and various other Indian languages; advertisement sales and market support services.
The statement added the survey revealed that despite substantial consumption of content in various Indian languages (apart from English), the income or profits shown by various group entities is "not commensurate with the scale of operations in India".
"The survey operations also revealed that 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 added.
Further, the survey, the spokesperson said, has also thrown up several discrepancies and inconsistencies with regard to "Transfer Pricing" documentation.
"The survey operation has resulted in unearthing of crucial evidences by way of statement of employees, digital evidences and documents which will be further examined in due course."
The officials of the I-T depratment recorded statements of only those employees 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. Despite such stance of the group, the survey operation was conducted in a manner so as to facilitate continued regular media/channel activity," the spokesperson said.
Earlier, BBC had said it was cooperating with the income tax department, which was conducting a survey at its offices in New Delhi and Mumbai.
"The Income Tax Authorities are currently at the BBC offices in New Delhi and Mumbai and we are fully cooperating," the BBC News Press Team said in a statement.
The Income Tax 'survey' on the British Broadcasting Corporation (BBC) offices located in Delhi and Mumbai concluded nearly after 60 hours on Thursday evening.
Issuing a statement the BBC News PR had 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 statement added.