Nokia India, which is facing a tax demand of R3,997 crore in India for transactions with its global parent, has moved the Delhi High Court to quash a September 25 order of the I-T department to provisionally attach the company's immovable properties, assets and bank accounts, saying it is “bad in law and arbitrary”.
Nokia has told the Court in a petition that the order of the Assistant Commissioner of Income Tax (ACIT) was passed without evaluating the sustainability of a “so-called” anticipated tax liability. The I-T department claims the tax liability that will be raised on completion of pending assessments of the Finnish handset maker will be difficult to recover.
Nokia has also accused the taxman of acting “illegally and in a totally high-handed and capricious manner”, bringing its business to a “standstill”, adding the I-T Department had proceeded with the attachment without appreciating the real value of Nokia's assets in India and without “ascertaining” the actual tax demand that may arise against the firm.
It has added the taxman acting “in excess of the discretion vested in it” has infringed its fundamental right to carry on its trade and business and has attached its assets without even forming an opinion as to whether Nokia India is likely to “thwart the recovery of taxes by alienating its assets”.
Earlier, the Court allowed the company to operate its bank accounts, adding that Nokia India will file monthly statements of its bank accounts with the assessing officer. However, the court restra-ined Nokia from surrendering its lease hold rights or from transferring ownership rights, in respect of its properties to any third person, namely Microsoft.
Nokia now wants the ACIT's order to be quashed.
The I-T department in September had argued before the high court that the Finnish handset maker will not have sufficient assets to meet the anticipated tax liability of an estimated R3,997 crore, in addition to an existing demand of R654 crore after the company repatriated R3,500 crore of dividends to its parent company. It also paid R595 crore by the way of dividend distribution tax on September 10.