Tax evasion. IT Dept says survey at offices of ‘prominent international media co‘, finds evidence of tax not paid in some cases

Income Tax Department on Friday said the ‘survey’ at various premises of a ‘prominent international Media Company’ has shown that income/profit are not commensurate with scale of operation of some group entities besides possible tax evasion.

Although the IT Department statement did not mention it specifically, all details in statement indicated that the organisation was BBC. The ‘survey’ begun on February 14 and went on till February 16. “The Department said that survey was carried out at the business premises of “group entities of a prominent international Media Company at Delhi and Mumbai. The group is engaged in the business of development of content in English, Hindi and various other Indian languages; advertisement sales and market support services, etc,”

According to the Department, the ‘survey’ revealed that despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities is not commensurate with the scale of operations in India. “During the course of the survey, the Department gathered several evidences pertaining to the operation of the organisṭation 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,” it said.

Further, the ‘survey’ operations also revealed that services of seconded employees have been utilised for which reimbursement has been made by the Indian entity to the foreign entity concerned. Such remittance was also liable to be subject to withholding tax which has not been done. Further, the ‘survey’ has also thrown up several discrepancies and inconsistencies with regard to Transfer Pricing documentation.

“Such discrepancies relate to level of relevant Function, Asset and Risk (FAR) analysis, incorrect use of comparables which are applicable to determine the correct Arms Length Price (ALP) and inadequate revenue apportionment, among others,” it said.

It mentioned that the ‘survey’ operation has resulted in unearthing of crucial evidences by way of statement of employees, digital evidences and documents which will be further examined in due course. It is pertinent to state that statements of only those employees were recorded whose role was crucial including those connected to, primarily, finance, content development and other production related functions.

COMMENT NOW