FEMA case against BBC India for ‘foreign exchange violation’

New Delhi: The Enforcement Directorate (ED) has registered a case against the British Broadcasting Corporation (BBC) India under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation. The case was registered two weeks ago and so far, they have questioned six employees, including one of the directors of BBC India, officials said.

Sources said ED has also called for documents and the recording of statements of some company executives under provisions of the FEMA. The probe is essentially looking at purported foreign direct investment (FDI) violations by the company. “Today, they have called another employee of BBC along with some documents and questioning is still going on,” an official said.

Earlier in February, the Income-Tax Department had carried out surveys at the premises of the BBC in New Delhi and Mumbai on what it alleged was “non-compliance” with transfer pricing rules and vast diversion of profits. A survey, conducted under Section 133A of the I-T Act, is usually a precursor to a search and seizure operation, and takes place only at business premises. I-T officials look into the books of accounts, bank accounts, cash, stock and non-valuable documents during a survey.

The focus of the surveys on BBC is to look into the “manipulation of prices for unauthorized benefits, including tax advantages”. The I-T department alleged BBC has been non-compliant under transfer pricing rules; persistent and deliberately violative of transfer pricing norms. It deliberately diverted a significant amount of profits, and did not follow the arm’s length arrangement in the case of allocation of profit, the department claimed.

The tax department’s action came weeks after the British broadcaster had on January 17 released a documentary on the 2002 Gujarat riots titled ‘India: The Modi Question’.

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