BBC’s ‘non-compliance’ invited I-T action, it got notices earlier: report

New Delhi: The Opposition calls the surveys at BBC offices as a revenge of central government over the broadcaster’s damning documentary “India: The Modi Question”.

It seems there was some reason to show for the IT sleuths raiding of the BBC offices in Mumbai and Delhi, according to a report by India Today.

Previously on several occasions Income Tax department served notices to the broadcaster’s India unit. This reportedly happened mostly during the UPA government.

In 2005 the BBC received an Income Tax notice related to transfer pricing adjustment for the assessment year 2002-03 and 2003-04, the report said.

Subsequently, the BBC submitted its return income on December 2, 2003 wherein it declared NIL income and claimed “credit for tax deducted at source and prepaid taxes amounting to Rs 46, 88,196.

Meanwhile, the transfer price is all about a cost regarding the value of goods and services between the independent units of an organization.

While the income tax department continued its surveys at BBC premises on Wednesday, The Indian Express reported quoting informed sources that ‘transfer pricing cases do not typically entail survey or search actions’.

Surveys could happen only in the event of “non-compliance”, according to the report.

“Tax cases involving transfer pricing rules and diversion of profits typically involve undertaking assessments by an assessing officer and issuance of a notice before undertaking any survey/search action” the report quoting the source said.

However another person with knowledge of the matter reportedly said there could be some irregularities regarding the Tax Deducted at Source (TDS) provision of the Income Tax Act.

Similar cases, according to this person, earlier invited action against some Chinese mobile phone manufacturers.

Meanwhile, tax experts reportedly said that surveys/search actions for violation of transfer pricing rules are generally uncommon, and as such could have been used as an ostensible reason.

According to them transfer pricing issues are very common among foreign companies; however acting against them with surveys and searches are not.

Government officials linked the ongoing survey at BBC offices to the foreign broadcaster’s ‘deliberate non-compliance with the transfer pricing rules’ as well as its ‘vast diversion of profits’.