Nokia on Tuesday filed letters of objection in India protesting against the actions taken by the Income-Tax authorities at Chennai on grounds that it ran counter to the domestic laws of India and international standards.
Finnish handset maker Nokia on Tuesday filed letters of objection in India protesting against the actions taken by the Income Tax authorities at Chennai.
The company said the actions of the tax authorities ran counter to the domestic laws of India and international standards.
“Nokia believes the actions of the Income Tax authorities in Chennai are excessive, unacceptable and inconsistent with Indian standards of fair play and governance. Specifically, in tax investigations like this, local standards would prohibit government officials from entering the factory premises and Nokia IT systems without valid authorisation and questioning individual employees for intolerably long periods of time, even after they have fully cooperated with the authorities," Nokia said in a statement
Nokia said that it has not received any official information on the potential tax claims, and thus far has only seen wildly varying claims from anonymous officials via the media. “We do not see any merit in any of the claims, and are ready to defend ourselves vigorously,” the handset maker said. This is the first time that Nokia has issued a statement on the issue.
The issue is that any royalty payment made against supply of software by the parent company attracts a 10 per cent tax deduction. According to the I-T Department, Nokia India did not pay this tax since its plant went on stream in 2006.
Nokia said that it is in full compliance with local laws as well as the bilaterally negotiated tax treaty between the Governments of India and Finland, as far as withholding tax on supply of operating software is concerned. Nokia has filed the protest letters with four tax officials, including the Director General of Income Tax (Investigation), Tamil Nadu.
Dept to reply
Reacting to Nokia's protest note, a senior official of the Income Tax Department's investigation team on condition of anonymity said that Section 131 of the Income Tax Act gives power to IT officials to search a person’s home, office or any other place whenever required for IT evasion. “We will give a reply to Nokia's protest tomorrow," the official said.
The Central Forensic Science Department, Hyderabad, recently did a survey of the Nokia's systems to find out how they are downloading the software. The report given by its director corroborated the stand taken by the I-T Department, said the official who is part of the investigation team but not authorised to speak to the media.
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