The Income Tax department has informed the Delhi High Court that
Nokia India and Nokia Corporation owe it Rs. 21,153 crores as total tax
liability (existing and anticipated), including penalty during a
seven-year period from 2006-2013.
The amount payable by Nokia has
been arrived at by the IT department on the basis that the mobile
manufacturing firm does not discharge its TDS liability on royalty
payments and is not entitled to any deduction under tax laws for
operating from a special economic zone (SEZ).
The submission has
been made by the IT department in its reply to Nokia's plea for
unfreezing of its assets in India prior to its USD 7.2 billion deal with
Microsoft.
In case TDS liability is paid and the deduction under
tax laws for operating from a SEZ is available to Nokia, then its total
tax liability (existing and anticipated), including penalty would be Rs.
14,200 crores.
Meanwhile, a bench of justices Sanjiv Khanna and
Sanjeev Sachdeva adjourned the hearing on Nokia's plea to tomorrow when
the company may have to answer the court's queries regarding the total
investment made by it in India, dividend paid by it, quantum of
purchases of raw materials, whether Nokia Corporation has been filing
returns here, what will happen to Nokia Corp post-Microsoft deal, etc.
Nokia's
offer to pay a minimum of Rs. 2,250 crore, which could increase
depending upon the outcome of its deal with Microsoft, was recently
turned down by the IT department during the proceedings before the high court.
During an earlier
hearing, the IT department had informed the high court that Nokia
India's tax liability is over Rs. 6,500 crore.
Nokia had made the offer seeking to get its assets here, including its mobile manufacturing unit in Chennai, unfrozen.
It
has sought lifting of the stay on transfer of its assets in India
saying the high court's injunction will jeopardise the sale of its
Indian arm to Microsoft under the global deal.
On the last date of hearing, the
court had 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 here.
Nokia had told the court
that the amount was repatriated as dividend of 18 years and that in a
slump sale like this (Nokia-Microsoft deal) cash has to be removed.
It
had told the high court that its assets in India have "value in use but
not value in sale" and the only person who may use it is Microsoft.
"Either
they will buy our plant or they will source phones from elsewhere. If
Microsoft gets cheaper phones in another country, it will go there," the
company had told the court.
"Microsoft may use us or they may not. We have an outer window of 12 months," it had said
Nokia
had 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
the assets here will have little value.
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 crores 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 percent tax
deduction under the Tax Deducted at Source (TDS) category.
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