Friday, 14 February 2014

Nokia India moves SC, says can’t give tax undertaking

In a surprise development, Nokia India on Wednesday moved the Supreme Court against the Delhi High Court’s December 2013 order, asking it to give an undertaking to settle any final tax liabilities that will be imposed by the Income Tax Department in the ongoing Rs 21,000-crore tax dispute. The undertaking was in lieu of the I-T department lifting the freeze on the company's assets at its Chennai factory so that it could be transferred to Microsoft as per a deal between the two.

The HC had last week asked Nokia to give an undertaking guaranteeing that the parent company (Nokia Finland) will be liable for tax dues in India instead of depositing R3,500 crore in an escrow account preferably in India for any future tax demand, as demanded by the I-T department. The court had also clarified that the handset maker did not need to pay the amount immediately but as and when the demand was raised by the department and if the company failed to get a stay.
Stating that the HC had proposed additional conditions that cannot be met by any international listed company, Nokia said in its appeal that such an undertaking would amount to a pre-condition to transfer of Indian assets to Microsoft and would lead not only to closure of the Indian firm but its 30,000 staff would be rendered jobless.

According to the special leave petition, the parent company, Nokia Corp, cannot be held liable to pay for Nokia India’s liabilities and it is not willing to give any such conditional undertaking.

Legal sources said the original undertaking that Nokia had given was to settle future tax liabilities after it had exhausted all legal remedies. However, the HC wants the company to give a “simple undertaking” which makes it obligatory for it to respond to any claims the tax department makes before it has exhausted all legal remedies.

This can’t be done keeping in view how the arbitrary actions of the revenue authorities are, the company has held.

The HC in 2013 had attached the Chennai factory and had barred the company from transferring the plant to Microsoft
Source : Financial Express

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