Officials from the income tax department on Tuesday visited the offices of BBC in Delhi and Mumbai to carry out what they termed a “survey”, sparking a political row.
Opposition parties were quick to criticise the action and linked it to the media company’s airing of a two-part documentary on the 2002 Gujarat riots (when Prime Minister Narendra Modi was the chief minister of the state) just weeks ago, but the Bharatiya Janata Party (BJP) attacked the broadcaster instead, calling it a carrier of propaganda.
Income tax officials who asked not to be named linked the survey to possible tax evasion by the company, including violation of “transfer pricing rules”. They added that there was also a “diversion of profits” by the company. Transfer pricing refers to transactions between geographically dispersed units of a multinational corporation, with one cross-border transaction including payments for services rendered. It is a complex area of taxation.
“It’s a survey, not a raid or search, based on some inputs to find out if there are any irregularities on the part of BBC in following transfer pricing rules and diverting its profits. Any anomaly can only be confirmed after completion of the survey, which involves checking of documents. Such surveys are routinely conducted on businesses,” said an income tax officer, requesting anonymity.
In a short statement, the British broadcaster said it was fully cooperating with the tax survey. “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,” a company spokesperson said on Twitter.
People familiar with the developments said that the UK government was “closely monitoring reports of tax surveys conducted at the offices of the BBC in India”.
Union information and broadcasting minister Anurag Thakur said no one was above the law. “When the surveys are over, it issues a press note or holds a press briefing to share information. I believe that when the IT department will complete its survey, it will share details with you,” Thakur said.
The survey comes less than a month after the BBC aired a documentary on the Gujarat riots, citing a previously unpublished report of the UK foreign ministry that questioned Modi’s actions during the riots. India responded strongly to the documentary, with the external affairs ministry terming it “propaganda” that sought to peddle a “discredited narrative”. Modi was cleared of any wrongdoing by the Supreme Court.
The survey started at 11.30am in Delhi’s Kasturba Gandhi Marg and Mumbai’s Bandra Kurla Complex. As part of the operation, around 20-22 officers reached the BBC offices in Delhi and seized books of accounts, tax papers as well as mobile phones of journalists working there. Employees were asked to switch off and surrender their phones, and were only allowed to call family members late in the afternoon.
The IT survey team will stay at BBC offices overnight to go through the financial documents and the operation may go on beyond Wednesday as well, a person familiar with the matter said. He said that only key BBC office staff, who deal with finances, have been asked to stay back in the office while other staff has been allowed to go home.
The survey immediately sparked a political row, with Opposition parties saying that the administration wanted to muzzle free speech, and the ruling BJP attacking the company as Bhrasht Bakwas Corporation (corrupt, nonsense corporation).
BJP spokesperson Gaurav Bhatia said in a press conference in Delhi that no one was “above the law”, and characterised BBC’s coverage of various events concerning India as “venomous”. He was responding to criticism of the tax department’s actions by Opposition parties.
“The BBC has become the most Bhrasht Bakwaas Corporation in the world. Unfortunately, BBC’s propaganda and Congress’s agenda are on the same lines. Today, India is attaining great heights under PM Modi’s leadership and some sections do not like this. The BBC has all rights to do journalism in India, but they will have to abide by the law of the land,” Bhatia said.
The Congress attacked the government.
“Time and again, there has been an assault on freedom of press under the Modi government. This is done with brazen and unapologetic vengeance to strangulate remotely critical voices. No Democracy can survive if institutions are used to attack the Opposition and the media. People will resist this,” Congress chief Mallikarjun Kharge said.
Aam Aadmi Party leader Sanjay Singh said that Modi had reached the height of dictatorship. Communist Party of India (Marxist) general secretary Sitaram Yechury attacked the government for not accepting the Opposition demand for a joint parliamentary committee probe into the allegations of fraud against the Adani Group. “Since agencies doing these Valentine Day “surveys” how about @IncomeTaxIndia , @SEBI_India & @dir_ed conduct one on govt’s most valued sweetheart Mr. A?” Trinamool Congress leader Mahua Moitra tweeted.
The income tax officer cited in the first instance termed BBC a repeat offender. A second officer said the IT department was probing “deliberate” non-compliance of transfer pricing rules and the company’s “vast diversion of profits”.
“BBC deliberately diverted a significant amount of profits and has not followed the arm’s length arrangement in the case of allocation of profit,” said the second officer, requesting anonymity.
The two officers said that several notices were issued to BBC but the broadcaster was “defiant”.
“In the case of BBC, there has been persistent non-compliance with the transfer pricing rules for years due to which they got unauthorised tax advantages. As a result, several notices have been issued to BBC. However, it has been continuously defiant and non-compliant and has been significantly diverting their profits,” said the second officer cited above.
In a survey operation carried out under provisions of section 133A of the Income Tax Act, 1961, tax officials cover only the business premises of an assessee and those linked to it and not their residential addresses. However, tax authorities can seize documents. The IT department can scan through the documents such as books of accounts, bank accounts, cash, stock and non-valuable documents.
Last month, after BBC released the Gujarat documentary, the ministry of external affairs (MEA) questioned its motives, while adding that the documentary lacked objectivity.
“It makes us wonder about the purpose of this exercise and the agenda behind it. This is a propaganda piece designed to push a particular discredited narrative. The bias, the lack of objectivity, and a continuing colonial mindset, is blatantly visible,” MEA spokesperson Arindam Bagchi had said.
The government moved to take links to the documentary down from some social media platforms, citing Information Technology Rules.
At the time, BBC had defended itself. “The documentary series examines the tensions between India’s Hindu majority and Muslim minority and explores the politics of Mr (Narendra) Modi in relation to those tensions,” it had said in a statement.