IT department rejects Nokia’s Rs2,250 crore offer against tax liability

The Income Tax Department has told the Delhi High Court that Nokia's offer to pay a minimum deposit of Rs2,250 crore, against the Finnish mobile maker's total tax liability of nearly Rs 6,500 crore, was not acceptable.

Nokia India, sticking to its offer, contended that it was for the I-T department to decide whether it was better off with the amount offered.

In response to the observation by Justices Sanjiv Khanna and Sanjeev Sachdeva that the mobile phone firm was "offering nothing'', senior advocate Harish Salve, representing Nokia, said the company was not in a position to offer more.

According to Salve, R2,250 crore was the minimum amount depending upon the outcome of Nokia's deal with Microsoft (See: Nokia offers to deposit Rs2,250 crore against tax demand as Microsoft deal nears).

The mobile handset-maker had earlier 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 9 December when Nokia would give details of its assets and liabilities as also the amount of tax it had paid here.

The bench also sought to know the reason behind Nokia India's intention of sending Rs 3,500 crore to its parent company as dividend for 18 years and asked why the amount should not be brought back here.

The observation from the bench came after Nokia said it was exiting the mobile manufacturing business, globally, irrespective of whether its plant in India was sold or not.

Earlier, the bench said that the handset manufacturer had earlier said it would continue manufacturing of mobile phones in India and was now saying its unit in India would be wound up eventually.

The bench sought to know why the company had transferred Rs3,500 crore abroad and whether it was not its intention to keep liquid assets in India.

The bench remarked that Nokia had Rs4,100 crore cash in India (dividend and tax combined) but the company repatriated it.

"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?" the bench said.

Responding to the questions Salve told the court that the repatriated amount was dividend for 18 years, adding that if Nokia were selling its shares to Microsoft the Indian unit would have continued. He added, that in a slump sale like the Nokia-Microsoft deal, cash had to be removed.