The income tax department has claimed to have unearthed “several discrepancies” in the way in which global broadcaster BBC calculated its tax liability in India under transfer pricing regulations.
After a three-day survey during which tax sleuths stormed into the UK-based broadcaster’s offices in Delhi and Mumbai, the IT authorities put out a statement that was short on specifics and couched in tax jargon that left everyone clueless about the nature and outcome of the entire exercise.
For starters, the tax department did not spell out which assessment year the survey pertained to and failed to quantify the extent of the tax violation.
“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 comparables which are applicable to determine the correct Arms’ Length Price (ALP) and inadequate revenue apportionment, among others,” the Central Board of Direct Taxes said in its statement.
The Opposition has slammed the government for unleashing the tax department on the BBC after the broadcaster aired a two-part documentary that was critical of Narendra Modi’s role during the Gujarat riots of 2002 when he was chief minister. The documentary, which aired only in the UK, suggests Modi did little to stop the sectarian violence.
In the statement, the tax authorities said the income and profits disclosed by the BBC’s various units were “not commensurate with the scale of operations in India”.
Without naming the BBC, it said the department had gathered a lot of evidence that supported its contention and it was still in the process of going through statements of employees, digital files and documents of a “prominent international media company”.
“During the course of the survey, the department gathered several evidences pertaining to the operation of the organisation which indicate 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,” it said.
“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,” the tax department said.
The department said it had exercised due care to record statements of only key personnel.
However, BBC staff had tried to use dilatory tactics when asked to produce copies of certain documents and agreements, it added.
The BBC has not commented on the latest charges, and has said it will respond to any direct communication from tax officials.
On Thursday evening, after the 60-hour survey at its offices in Delhi and Mumbai ended, the company said it would continue to cooperate with the authorities. It said the priority for it now was to support its staff, many of whom had had to stay overnight in the offices during the inquiries, and that it would continue to report without “fear or favour”.