Income Tax Department concludes survey at BBC offices, finds several discrepancies

• The Income Tax released a statement on the survey operation it had carried out at BBC offices in Delhi and Mumbai this week
• I-T department said that the income/profits shown by the BBC were "not commensurate with the scale of operations in India"
• I-T survey further flagged several discrepancies and inconsistencies with regard to Transfer Pricing documentation 

A day after marathon "investigations" by the Income Tax Department at the BBC's Delhi and Mumbai offices ended, the agency issued a statement making serious allegations against the British broadcaster. In a statement, the I-T department said the revenue/profits reported by the BBC "do not reflect the scale of operations in India".

"The survey revealed 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," the I-T department said. The agency said it has gathered evidences 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."

The I-T department also alleged that BBC staff used delaying tactics when asked to produce documents and agreements. During the investigation, the Income Tax department found that “services of posted employees were utilized for which the Indian entity reimbursed the relevant foreign entity. Such transfers were also subject to withholding tax, which was not done."

The I-T probe further pointed out several discrepancies and inconsistencies in transfer pricing documentation. "Such discrepancies relate to level of relevant Function, Asset and Risk (FAR) analysis, incorrect use of comparables which are applicable to determine the correct Arms Length Price (ALP) and inadequate revenue apportionment, among others," the statement said.

The Income Tax said the probe uncovered "substantial evidence in the form of employee statements, 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," the Income Tax department said on Friday.