Nokia offers to deposit Rs2,250 crore against tax demand as Microsoft deal nears

Mobile phone maker Nokia has moved the Delhi High Court seeking to lift a stay on transfer of its Indian assets, in an alleged tax evasion case, in order to salvage its $7.2 billion global sale deal with Microsoft.

Nokia has submitted that it would pay a minimum deposit of Rs2,250 crore once the sale of its business to Microsoft is completed, provided the government revokes the IT department's order to freeze its assets before 12 December, the deadline for transfer of Nokia's global assets to Microsoft.

The company also offered to pay an even higher amount in case the final sale price turns out to be higher.

"Immediately after sale, irrespective of the sale price we will deposit Rs2,250 crore. If sale price is much higher, we will deposit entire surplus after adjusting outstanding liabilities, excluding income tax liabilities," Nokia's counsel told the court.

Counsel for the income tax department, meanwhile, informed the court that the tax liability of Nokia was nearly Rs6,500 crore.

Nokia also threatened to wind up operations in India over the next 12 months if the sale of its Chennai unit fails to materialise. Once the unit stops operations, Nokia pointed out, the plant in itself will have little value.

The HC had, in its 26 September order, restrained Nokia from selling or transferring its ownership rights relating to movable and immovable assets in India.

A bench of justices Sanjiv Khanna and Sanjeev Sachdeva has issued notice to the tax department seeking its response to Nokia's interim plea for modification of its 26 September order, latest by 28 November.

Meanwhile, the high court observed that the sale will not remove the tax liability of Nokia's Indian unit as "any successor would be bound to pay the tax liabilities of its predecessors as per statutory provisions".

If the tax authorities opt to freeze all the immovable assets of Nokia in India, the company's factory in Chennai will be left out of the transition process.

Nokia Chennai one of of the Finnish mobile handsets maker's biggest facilities, which received the Golden Peacock Award for its environment management, in 2010.