Trouble for BBC: ED registers case under FEMA

The financial probe agency has asked BBC to furnish its books of accounts and financial statements

NEW DELHI | Updated: 13 April, 2023 3:43 pm IST
I-T department conducted survey at BBC offices in Delhi and Mumbai in February (TNI File Photo By Sumit Kumar)

Months after the Income Tax Department carried out surveys at the British Broadcasting Corporation (BBC) offices in India, the Enforcement Directorate (ED) has registered a case of alleged foreign exchange violations under the Foreign Exchange Management Act (FEMA) against the UK-based company, sources said on Thursday.

An ED source related to the probe told The New Indian, “We have registered a case against BBC under sections of FEMA for foreign remittances.”

The financial probe agency has asked the BBC to furnish its books of accounts and financial statements. Sources also said that the ED also asked one of the senior correspondents to come with some documents.

In the last few days, the ED has also asked several other staff and advocates of BBC in India to submit some documents in connection with its probe.

Earlier on February 14, the I-T department carried out surveys at offices in Delhi and Mumbai. Following the searches, it said that it had “uncovered irregularities” in the accounting books of the UK-based media company.

On Friday, February 16, the IT department said that the BBC is engaged in the business of developing content in English, Hindi and various other Indian languages; advertisement sales and market support services, etc.

“The survey revealed that, despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities are not commensurate with the scale of operations in India,” the I-T department said.

It further said that during the survey at the offices of BBC, the department gathered “several pieces of evidence pertaining to the operation of the organisation that indicate that tax has not been paid on certain remittances that have not been disclosed as income in India by the foreign entities of the group”.

“The survey operations also revealed that the 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,” it alleged.

The I-T department also alleged that the survey had also thrown up several “discrepancies and inconsistencies with regard to Transfer Pricing documentation”.

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

The I-T department further said that its survey operation has resulted in the “unearthing of crucial pieces of evidence by way of statements of employees, digital evidence and documents”, which will be further examined in due course.

The I-T department also clarified that only the statements of those employees, whose role was crucial, were recorded. These included those employees who are connected to finance, content development and other production-related functions.

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