Nokia’s guarantee serves no purpose, I-T tells Delhi High Court

Jan 04 2014, 09:12 IST
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In its application before the HC, the taxman pleaded that necessary directions should be issued to Nokia for placing the amount of Rs 3,500 crore in an escrow account. In its application before the HC, the taxman pleaded that necessary directions should be issued to Nokia for placing the amount of Rs 3,500 crore in an escrow account.
SummaryTax dept argues Nokia has not stated key information on deposit and mode of realisation.

The income-tax department on Friday told the Delhi High Court that the guarantee given by Nokia Finland does not serve any purpose as it does not state specific information under different subheads, which is required for lifting the freeze on the Nokia India’s manufacturing unit in Chennai.

The lifting of the freeze was allowed by the court last month, subject to a guarantee by Nokia Finland to pay up the tax amount if the company lost the case in the court. The freeze was lifted to enable the completion of the global company's $7.3-billion deal with Microsoft.

Senior Counsel NP Sahni, appearing on behalf of the department, said that the requisite information concerning the “situs” for deposit of Rs 3,500 crore and its mode of realisation has not been specified by Nokia in its letter of guarantee. He also highlighted that Nokia had not stated the duration within which it will deposit the said amount.

The court has fixed January 17 as the next date of hearing.

In its application before the HC, the taxman pleaded that necessary directions should be issued for placing the amount of Rs 3,500 crore in an escrow account. Additionally, it has asked the court to devise a mechanism for adjustment of refunds till the time the entire issue reaches finality.

Sources in the tax department told FE that a host of TDS matters concerning Nokia India are pending in various forums across the country, which could take a long time for resolution, adding that the department cannot be made to wait for such long periods for the satisfaction of the demands raised by it.

Department officials also said that clarification from the High Court is sought on who will be liable for Nokia India's tax dues, in case adverse orders exceeding Rs 3,500 crore are passed and upheld by the courts.

The taxman, via clarifications, has sought that the tax liability of Nokia Finland and NIPL should be brought on a par, along with liberty being granted to the department to approach the court in case NIPL's demand exceeds Rs 3,500 crore.

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