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Tax row: HC asks IT dept to decide on Nokia offer

November 28, 2013 20:02 IST

The Delhi High Court on Thursday asked the Income Tax (IT) department to take a decision on the offer of Finnish mobile maker Nokia to pay a minimum deposit of Rs 2,250 crore (Rs 22.50 billion) to it towards the tax liability of the company which is nearly Rs 6,500 crore (Rs 65 billion).

"You (IT department) have to take a decision. Say yes or no. If it is acceptable say yes, if not, say no. Either way but you can't say we will not decide," a bench of justices Sanjiv Khanna and Sanjeev Sachdeva said.

The court, meanwhile, adjourned the hearing in the case to December 2 on the plea of the IT department.

Earlier, the mobile handset-maker firm had sought lifting of a stay on transfer of its assets in India saying the court's injunction will jeopardies the sale of its Indian arm to Microsoft under the $7.2 billion global deal.

The company submitted that once the sale of its business to Microsoft is completed, it is willing to pay a minimum deposit of Rs 2,250 crore as tax and the amount could be higher depending upon the final sale price.

The IT department told the court that the tax liability of Nokia is nearly Rs 6,500 crore. Nokia said if the sale of its Indian unit in Chennai does not happen, the company will wind up its operations here over a period of 12 months and in itself the assets here will have little value.

Taking note of the plea of the firm, the court had asked the IT department to respond by today to the application that has sought modification in the September 26, 2013 order by which Nokia has been restrained from selling or transferring its ownership rights in India relating to movable and immovable assets.

The high court had, however, observed "any successor would be bound to pay the tax liabilities of its predecessors as per statutory provisions".

"Immediately after sale, irrespective of the sale price, we will deposit Rs 2,250 crore. If the sale price is much higher, we will deposit the entire surplus after adjusting outstanding liabilities, excluding income tax liabilities," Nokia's counsel had said.

In its plea, Nokia has 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 per cent tax deduction under the Tax Deducted at Source (TDS) category.

Commenting on the court order, a Nokia spokesperson had said "this is the latest step taken by the company as it seeks a fair resolution with tax officials over issues that first emerged in January, and Nokia is now pursuing this action as it prepares to sell substantially all of its Devices and Services business to Microsoft." 

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