The Income Tax (IT) department unearthed evidence confirming major tax discrepancies by UK-based broadcaster BBC’s Indian subsidiary (BBC India). During its raids at the media house’s Mumbai and Delhi offices, the department discovered that taxes had been evaded for two consecutive despite a mutual agreement procedure (MAP) being in place. MAP is a bilateral arrangement between the tax authorities of two countries intended to mitigate the issue of double taxation.
The IT department has found various transfer pricing violations in BBC India’s dealings with its parent company BBC UK. According to reports, after three days of investigation, IT officials discovered that the media house evaded taxes to the tune of about 55-60 crores by not filing tax returns in Bharat. Since there is a clear-cut case of tax evasion, BBC India is liable for prosecution by the IT department.
IT authorities completed the survey on the Delhi and Mumbai offices of the media house on February 16. “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 BBC is a trusted, independent media organisation, and we stand by our colleagues and journalists who will continue to report without fear or favour,” a BBC Spokesperson said confirming the development.
“BBC India is a subsidiary of BBC UK. However, BBC India makes production and sends it to the UK for commercial decisions. In return, BBC UK gives approximately nine per cent to India which they have to give salaries and other operating expenses including rents and production costs. The department feels this could be the case of transfer pricing and needs to investigate further on this angle. However, prime-facie, it is a violation of transfer pricing rules”, noted told Zee Business.
As per reports, BBC India failed to respond to numerous notices sent by the IT department asking the media house to present its case. Furthermore, the Central Board of Direct Taxes (CBDT) confirmed that IT officials have discovered crucial pieces of evidence regarding transfer pricing documentation in the form of statements of employees, digital proof and documents.
The CBDT also said that the I-T officials have found several discrepancies and inconsistencies in the transfer pricing documentation. “Income, profits shown by various group entities not commensurate with the scale of operations in India. Several discrepancies and inconsistencies with regard to transfer pricing documentation have been found. The department gathered several pieces of evidence 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”, reads the CBDT statement.
