Income Tax survey at BBC offices to probe ‘irregularities in transfer pricing, int’l taxation’

Over 20 officials from the Income Tax department reached the New Delhi and Mumbai offices of the British Broadcasting Corporation (BBC) Tuesday, to carry out a “survey” to probe irregularities in “transfer pricing” and “international taxation”.

Several account books and documents along with phones of journalists were also seized in the survey action, sources said. A source said that the action was not a raid but a survey.

“The office is sealed and the survey is on. We are investigating the account books, ledgers, balance sheets, tax papers. The phones of employees will be returned after the survey is over. It is still going on and we cannot share any details about it,” the source said.

Transfer pricing is an accounting practice that shows – as part of a larger exercise — the price that one unit or division in a company charges another division for goods and services provided, including salaries of their employees.

Transfer pricing can lead to tax savings for a corporation, which may be contested by tax authorities as evasion. In this case, the IT department is probing the BBC (the larger enterprise) for irregularities in transfer pricing among its divisions, subsidiaries.

The source said, “It is suspected that the BBC did not comply with the Transfer Pricing Rules and got unauthorized tax advantages. It is also suspected that they diverted profits.”

The source added that the BBC was earlier sent notices to explain the suspected violations but they were “non-responsive”.

The survey action comes days after a controversy over the broadcaster’s documentary series on Prime Minister Narendra Modi and allegations linked to his “role” in the 2002 Gujarat riots.

The documentary, “India: The Modi Question”, was taken down from public platforms last month and the Centre used emergency powers under the Information Technology Rules, 2021, to block multiple YouTube videos and Twitter posts sharing links to the film.

According to the rules, an individual in a survey action cannot be physically searched. Authorities can only enter the area of business of the individual or organization and can impound account books that are being investigated and not valuables like money and jewellery.

In a search, which is usually referred to as a “raid” and is more invasive, authorities can search all locations including residential premises, vehicles and office spaces.

‘BBC being targeted’

The Opposition Tuesday cried foul saying the British broadcaster was being targeted over its documentary that was critical of Modi. Congress leader Jairam Ramesh tweeted that while the Opposition was asking for a Joint Parliamentary Committee probe into the Adani-Hindenburg row, the government was going after the BBC. “Vinash kale vipreet budhi,” he tweeted.

Congress leader Gaurav Gogoi also tweeted saying, “At the time India holds the Presidency of the G-20 nations, PM Modi continues to brazenly show India’s slide into authoritarianism and dictatorship. Raids on BBC, clean chit to Adani, tax cuts for the rich, people’s homes being bulldozed, inequality and unemployment on the rise.”