This Article is From Dec 02, 2013

Nokia's offer to settle tax case for Rs 2,250 crore rejected by taxmen

Nokia's offer to settle tax case for Rs 2,250 crore rejected by taxmen
New Delhi:
The Income Tax Department has told the Delhi High Court that Nokia's offer to pay a minimum deposit of Rs 2,250 crore, against the Finnish mobile maker's total tax liability of nearly Rs 6,500 crore, is not acceptable.
 
Nokia India, however, stuck to its offer, saying it is for the I-T department to decide whether it is better off with the proposed amount.
 
A bench of justices Sanjiv Khanna and Sanjeev Sachdeva observed that the mobile phone firm was "offering nothing". Responding to it, senior advocate Harish Salve, appearing for Nokia, said, "We are not in a position to offer more".
 
Rs 2,250 crore is minimum amount depending upon the outcome of Nokia's deal with Microsoft, Mr Salve added.
 
Earlier, the mobile handset-maker firm had sought lifting of a stay on transfer of its assets in India saying the court's injunction would jeopardise the sale of its Indian arm to Microsoft under the $7.2-billion global deal.
 
The bench listed the matter for December 9 when Nokia has to give details of its assets and liabilities as well as how much tax it has paid here.
 
The bench also questioned Nokia India's intention behind sending Rs 3,500 crore to its parent company as dividend of 18 years and asked why the amount should not be brought back to the country.
 
The bench made the observation after Nokia said it is exiting the mobile manufacturing business, globally, irrespective of whether its plant in India is sold. Nokia had earlier said it will continue manufacturing of mobiles here and now it is saying its unit in India will be wound up eventually, the bench noted.
 
"Why did you transfer Rs 3,500 crore abroad? Was it not your intention not to keep liquid assets here? You had Rs 4,100 crore cash here (dividend and tax combined). You repatriate it," the bench said.
 
"When they (IT department) attach your bank accounts, you come here. That time you were categorical that manufacturing (here) will go on. Now, there is a change in your stand. So shouldn't the amount (that was repatriated) be brought back to India?" 

Taking note of the plea of the firm, the court had earlier asked the I-T department to respond by November 28 to the application that has sought modification in the September 26 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 earlier 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. 

.