This ad will auto close in 10 seconds

Nokia tax plea: High Court verdict Thursday

PTI | Last Updated: Wednesday, December 11, 2013 - 21:15

New Delhi: The Delhi High Court will pronounce Thursday its verdict on Nokia's plea for a direction to Income Tax department for lifting of the stay on transfer of assets here in view of its USD 7.2 billion global deal with Microsoft.

A bench of justices Sanjiv Khanna and Sanjeev Sachdeva, which today reserved its order after hearing arguments from the mobile manufacturing company and the I-T department, will pronounce the verdict at 2.15 pm tomorrow.

Nokia India Private Ltd's assets and accounts were frozen by the Income Tax department for alleged income tax evasion by the company.

Nokia's counsel had earlier argued that if the tax row was not resolved by December 12, its Finnish parent company Nokia Corp's deal with Microsoft may land in trouble.

The lawyer told the bench that in a similar tax matter in Brazil, an offer was made to the authorities there in the nature of bank guarantees, but they were only to the tune of 5 percent of the total tax demand in that country.

Here in India, the company was offering to deposit Rs 2250 crore in cash, the counsel said.

Nokia's lawyer said the Finnish company would be "happy to give" a letter of guarantee for its own liabilities, but not for those of its Indian firm whose assets would be sold to Microsoft post the deal.

Declining Nokia's offer, I-T department had informed the high court that Nokia India's tax liability is over Rs 6,500 crore.

In its reply to Nokia's plea for unfreezing of its assets in India, the I-T department said that Nokia India and Nokia Corporation owe it Rs 21,153 crore as total tax liability (existing and anticipated), including penalty during a seven-year period from 2006-2013.

The amount payable by Nokia was arrived at by the I-T department on the basis that the mobile manufacturing firm does not discharge its TDS liability on royalty payments and is not entitled to any deduction under tax laws for operating from a special economic zone (SEZ).

In case TDS liability is paid and the deduction under tax laws for operating from a SEZ is available to Nokia, then its total tax liability (existing and anticipated), including penalty would be Rs 14,200 crore, the I-T department has said.

In its plea, Nokia said it intends to sell its assets in the country as part of the sale of its entire global mobile phone manufacturing business to software giant Microsoft but without the vacation of stay on sale of its assets, the deal is not possible.
The firm has also said Microsoft is interested in purchasing Nokia India's assets only if relevant approvals have been obtained from the appropriate authorities.

The issue relates to the IT department's Rs 2,080 crore tax demand notice to the Finnish mobile firm.

The alleged tax evasion pertains to royalty payment made against supply of software by its parent company, which attracts a 10 percent tax deduction under the Tax Deducted at Source (TDS) category.

First Published: Wednesday, December 11, 2013 - 21:15
comments powered by Disqus