BBC’s profits not in line with scale of operations: I-T dept

NEW DELHI: The Income Tax (I-T) department’s survey of the British Broadcasting Corporation (BBC) suggests income or the profits shown by its various entities “is not commensurate with the scale of operations in India” and “evidence” has emerged which indicates “the company has not paid taxes on certain remittances”, the Central Board of Direct Taxes (CBDT) said in a statement on Friday. CBDT added that I-T officials have found several discrepancies in the transfer pricing documentation of BBC.

Reacting to CBDT’s claims, a BBC spokesperson said: “The BBC will respond appropriately to any direct formal communication received from the I-T department.”

In the statement, CBDT’s official spokesperson Surabhi Ahluwalia said: “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.” Ahluwalia said that the I-T department has gathered evidence pertaining to the operation of the organisation during the course of survey, 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 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,”she said.

The statement comes four days after I-T officials visited BBC offices in Delhi and Mumbai on Tuesday morning, and carried out a three-day long “survey” operation to ascertain violation of transfer pricing rules and diversion of profits. It was carried out less than a month after the BBC aired a documentary on the 2002 Gujarat riots, which criticised the role of then chief minister Narendra Modi. The survey was criticised by opposition parties although a BJP spokesperson said the tax department was acting independently.

During the operation, around 20-22 I-T officers stayed at BBC offices overnight, making copies of documents and questioning employees. Specifically on the issue of transfer pricing (a complex area of taxation where one unit of a multinational in one geography is paid for services or products by another unit of the same company in another geography), CBDT claimed the survey has highlighted several discrepancies.

CBDT clarified on Friday that the survey operation at BBC didn’t hinder the broadcaster’s regular media operations and statements of only crucial employees were recorded, while also accusing BBC staff of using dilatory tactics during the three-day long operation.

The BBC spokesperson quoted above said the broadcaster’s previous statement on the matter still stands. “We will continue to cooperate with the authorities and hope matters are resolved as soon as possible,” it said in a statement.

AROUND 20-22 I-T OFFICERS STAYED AT BBC OFFICES, MAKING COPIES OF DOCUMENTS AND QUESTIONING EMPLOYEES

I-T officials visited BBC office in Mumbai on February 14.