Nokia India’s assets have been frozen by the Tax Department even as the handset maker is in the process of completing its $7.2-billion deal with Microsoft.

The Indian tax authorities froze Nokia’s mobile phone manufacturing plant in Chennai, certain other buildings and bank accounts last week. Following the Tax Department’s action, Nokia moved the Delhi High Court which lifted the sanction on the company’s bank accounts, but its immovable assets remain frozen.

The move has been taken by the Tax Department after the handset maker disputed a Rs 4,000-crore tax notice. The Department sought to ensure that the company had sufficient funds to pay the amount before assets are sold to Microsoft.

Nokia said that it welcomed the High Court’s order and is now working closely with the tax authorities to find a solution to the remaining issues. “Nokia has sufficient assets in India to meet its tax obligations, details of which will be shared with the tax authorities to allay any concerns they may have.”

“Nokia reiterates that it operates with transparency in its business transactions, and is committed to resolving its outstanding issues with Indian tax authorities in accordance with all applicable laws, while also ready to defend ourselves vigorously as needed,” it added.

Nokia’s Global CEO Stephen Elop had rushed to India to meet top Government functionaries soon after announcing the deal with Microsoft, in a bid to resolve the tax issue.

Nokia India had been slapped with a tax demand notice for the five years beginning 2006-07. The demand concerns the tax treatment of payments made for software supplied by Nokia’s parent company for devices produced in India. Indian tax authorities consider the payments as royalties that are subject to taxation in India.

(This article was published on September 30, 2013)
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