The Delhi High Court on Monday appointed Ernst & Young India Pvt Ltd as valuer for Nokia India's Chennai mobile making plant, frozen over an alleged Rs 10,000 crore (Rs 100 billion) tax dispute with the Income Tax department.
A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva appointed the multinational professional service firm after it was informed by the Income Tax department that Nokia had written a letter to the Union revenue secretary informing him of appointing the valuer for its Chennai plant.
"The valuation of the assets will be done by Ernst & Young India Pvt Ltd. Counsel for Income Tax department says he has no objection to the valuer appointed by the said company.
The said valuation should be done in two months.
Put it for further hearing on September 7," the bench said.
The bench also said that Ernst & Young India Pvt Ltd will do the valuation of the assets of the company on both 'on going concern' (company not bankrupt) and 'non going concern' (company has gone bankrupt) methods.
During the hearing, counsel for Nokia said although it has written to revenue secretary about the appointment of Ernst & Young, the valuation firm has expressed some reservation and now it has been approaching a Korean firm for the valuation.
Counsel for Income Tax department said that it has no objection to any valuer appointed by company but the valuation should be done 'on going concern' method.
The bench was hearing an urgent plea filed by Nokia seeking permission to sell the assets as it had found a prospective buyer.
On April 24, the Income Tax department had told the court that the amount offered by an "arm's length buyer" for Nokia India's Chennai mobile making plant, is "very little".
An arm's length transaction is one in which the buyer and seller of a product act independently and have no relationship to each other to ensure that they act according to their self-interest and are not influenced by the other party.
The department had told the court that the offer amount is very little and if the unit and related assets were sold, it would be difficult to recover the tax amount which it has tentatively placed at Rs 10,000 crore.