Reasons for tax surveys at BBC offices in India
Today, the Income Tax authorities conducted a survey on the BBC premises in Delhi, given 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 with being a search/ raid.
In the case of the BBC, there has been persistent non-compliance with the abovementioned rules for years. As a result, several notices have been issued to the BBC. However, the BBC has been continuously defiant and non-compliant and has significantly diverted its profits.
The key focus of these surveys is to look into the manipulation of prices for unauthorized benefits, including tax advantages. These surveys have been undertaken due to BBC’s persistent non-compliance with the norms, making it a repeat offender.
In this case, BBC has been:
- Non-compliant under transfer pricing rules.
- Persistent and deliberately violative of transfer pricing norms.
- Deliberately diverted a 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 to investigate BBC’s violation of the Transfer Pricing Rules and its diversion of profits.
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