‘Why didn’t you open the door?’: Inside the tax survey on BBC offices

A government note shared with the media suggests the move is linked to alleged violation of transfer pricing rules and diversion of profit.

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The knock on the door came at noon on Tuesday. Two dozen officials from the Income Tax department landed at the entrance of the BBC office – on the sixth floor of the 17-storey Hindustan Times House in central Delhi. The door was opened after the staff’s initial hesitation.

“(I am from) the income tax department… Keep your phone here. You were opening the door for 10 minutes,” a man was seen confronting a BBC employee in a video widely circulated on social media.

“How can we open it without a warrant?” the employee was heard saying.

“Do you know the warrant has been received?” the man asserted.

This was the beginning of the income tax “survey” on the Delhi office of British Broadcasting Corporation. BBC India operates from the fifth and sixth floors of the building, owned by the Birla family. The sixth floor houses the accounts department and the fifth the editorial. The tax sleuths moved down to the fifth floor immediately after the sixth floor.

Around 100 BBC employees were in the building during the “survey”.

“Please don’t come in.”

“Please stay at home.”

Such messages went out to BBC employees from the organisation’s internal WhatsApp groups minutes after the “survey” began. The I-T team took away phones of all employees, switched them off and kept them on a desk.

A top BBC India executive later reassured employees that they need not worry about the raid and those who were not in office could work from home. Sources said nobody was allowed to exit the building but at least one person was allowed to leave as she was feeling sick.

BBC’s Mumbai office was also “surveyed”.

“There was some confrontation when we were asked to hand over our phones. We reacted to it. Of course, we could not work because of the things that were going on,” said a source, adding that the staff was cooperating with the officials.

The I-T team reportedly cloned digital data from devices in the accounts section.

In 2021, hearing Newslaundry’s writ petition regarding a tax “survey” at its office in September that year, the Delhi High Court had asked the IT department’s counsel to obtain instructions on providing an undertaking that the data collected during the “survey” will “not be leaked”. The court pointed to leaks from law enforcement agencies that appear in the media, and observed that it was “ethically, morally and legally wrong” to leak any personal information. 

Meanwhile, outside the BBC office in Delhi on Tuesday, the main gate was blocked by a sea of cameras, journalists and curious on-lookers. This gate was shut and the other entry to the building was strictly monitored. Only those with professional ID cards were allowed to enter the premises, which is home to brands like Hindustan Times, Fever FM, World Banka, Deutsche Bank, Dunkin’ Donuts etc.

Almost every news channel, including Republic TV, Times Now and News 18, had more than two reporters cover the story. At one point, Republic had five teams on the spot.

Allegations

While many alleged that the tax search was linked to the banned BBC documentary, the Narendra Modi government, in a note shared with journalists, accused the BBC of violating the transfer pricing rules and diverting profits.

Transfer pricing rules refer to transactions between related parties. Under taxation rules, if related parties offer services to each other while over-pricing or under-pricing their products, it may result in undue tax gains for a company.

The government note clarified that it was not a “raid” but a “survey”. “The income authorities conducted a survey on the BBC premises in Delhi, in view of 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 to be in the nature of a search/raid,” read the government note.

“In the case of the BBC, there has been persistent non-compliance with the above mentioned rules for years. As a result of the same, several notices have been issued to the BBC. However, the BBC has been continuously defiant and non-compliant and has significantly diverted their profits. The key focus of these surveys is to look into manipulation of prices for unauthorised benefits, including tax advantages. These surveys have been undertaken due to BBC’s persistent non-compliance of the norms, making it a repeat offender.”

It alleged the BBC has been “non-compliant under transfer pricing rules”, “persistent and deliberately violative of transfer pricing norms”, and “deliberately diverted” a “significant amount of the profits” without following “the arm’s length arrangement in the case of allocation of profit”. It said the surveys have been conducted with a view to investigate BBC’s “violation of the transfer pricing rules and its diversion of profits”.

Operations resume

Around 5 pm, several BBC employees were allowed to go home with their phones while people from the second shift, which begins at 2 pm, trickled into the building. 

Around the same time, BBC World director Liliane Landor, in a message to BBC India, said the organisation will cooperate with the authorities. “I realise how difficult today’s events in Delhi and Mumbai are, especially for those of you in our bureaux. I want you to know that we’re doing absolutely everything we can to ensure your safety first and foremost. This is our priority. The BBC will continue to fully cooperate with the authorities. If you need anything at all in the meantime please let me and Rupa (Jha) know.”

In an official statement, the BBC earlier said that “we are fully cooperating” with the I-T team. “We hope to have this situation resolved as soon as possible,” read the two-sentence statement. 

Sources said the BBC was earlier served a notice. A message to BBC India head Rupa Jha did not elicit any response. In response to an email with the same query, the BBC World Services sent the same two-sentence statement.

While operations on the fifth floor resumed, there were no signs of the tax team leaving the building. It’s not clear if the team, including officials from international taxation, will continue its “survey” on Wednesday.

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