Court allows Nokia sale on parent’s guarantee

Dec 13 2013, 13:16 IST
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The court has asked it to deposit Rs 2,250 crore in an escrow account as an interim payment (Reuters) The court has asked it to deposit Rs 2,250 crore in an escrow account as an interim payment (Reuters)
SummaryIn case Nokia India loses case, tax liability will be Nokia Finland’s

served on the company in March this year. However, the claim by the director general of international taxation rose to Rs 10,569 crore once the future liabilities were also taken into account. This could, however, come down to Rs 8,657 crore if Nokia India chooses to pay tax on the royalty as this payment would then be recognised as an expenditure while calculating the tax liability on the company, IT officials explained.

Separately, the chief commissioner of income tax (CCIT) has raised a tax demand of Rs 10,584 crore based on the assumption that Nokia's Indian operations from a special economic zone in Chennai is not eligible for the tax holiday available to such units. Assessment of whether that indeed is the case, however, is yet to be made by the income tax department. In case the company is found to be eligible for the five-year full income tax holiday and another five years of partial tax holiday, the CCIT's tax demand could fall nearly by half to Rs 5,543.

Taking into account both scenarios, the total tax outgo on Nokia would be Rs 14,200 crore, income tax officials told FE.

However, the court has not commented on the the various calculations made by the revenue department at this stage as it may prejudice the case.

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