Income Tax Dept alleges non-compliance from BBC on transfer pricing rules and diversion of profits

The Income Tax Department on Tuesday said British Broadcasting Corporation (BBC) was found in "persistent non-compliance" of tax norms, making it a "repeat offender". The statement from I-T Department comes hours after tax officials searched the BBC's bureaus in New Delhi and Mumbai on Tuesday, weeks after releasing a documentary critical of Prime Minister Narendra Modi's role in the 2002 Gujarat riots.

"Today, the Income Authorities conducted a survey on the BBC premises in Delhi, in view of the BBC’s deliberate non-compliance with the transfer pricing rules and its vast diversion of profits. It is pertinent to note that the above exercise conducted by the tax authorities, is called “survey” not search/raid as per the provisions of the Income Tax Act. Such surveys are routinely conducted and are not to be confused to be in the nature of a search/raid," said the I-T Department. 

"The Income Tax Authorities are currently at the BBC offices in New Delhi and Mumbai and we are fully cooperating. We hope to have this situation resolved as soon as possible," the BBC said in a statement.

The tax department said there has been "persistent non-compliance (from BBC) with rules for years"

"In the case of the BBC, there has been persistent non-compliance with the abovementioned rules for years. As a result of the same, several notices have been issued to the BBC. However, the BBC has been continuously defiant and non-compliant and has been significantly diverted their profits. The key focus of these surveys is to look into manipulation of prices for unauthorised benefits, including tax advantages. These surveys have been undertaken due to BBC’s persistent non-compliance of the norms, making it a repeat offender," the department added.

The BJP on Tuesday accused the British Broadcasting Corporation (BBC) of unleashing ''venomous'' reporting against India and alleged that its propaganda and the Congress' agenda go together.

BJP national spokesperson Gaurav Bhatia rejected the Congress' criticism of the Income Tax (I-T) action and said the government agency should be allowed to do its job, adding that the ''timing of the action was not decide by any government or outside power''.

Hitting out at the London-headquartered public broadcaster, he said the BBC is the ''most corrupt'' organisation in the world and the Congress should remember that former prime minister Indira Gandhi had also banned the broadcaster.

The BJP leader further claimed that the BBC has a ''tainted and black history of working with malice against India''. ''BBC propaganda and Congress agenda go together. Congress should remember that its own leader and former prime minister Indira Gandhi had imposed a ban on the BBC,'' he said.

The tax department said, "BBC has been non-compliant under transfer pricing rules; persistent and deliberately violative of transfer pricing norms; and delibrately diverted significant amount of the profits and have not followed the arm’s length arrangement in the case of allocation of profit."

Accordingly, the surveys have been conducted with a view to investigate BBC’s violation of the Transfer Pricing Rules and its diversion of profits, the department added.