India court to rule on seized Nokia plant on Thursday

Wed Dec 11, 2013 5:19am EST
 
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By Sumeet Chatterjee and Nigam Prusty

(Reuters) - An Indian court ruling expected on Thursday could determine whether Nokia will be free to transfer a phone-making factory to Microsoft Corp or pay as much as $3.4 billion in disputed taxes.

The Chennai plant is one of Nokia's biggest phone-making factories and was seized by authorities because of tax claims. Nokia appealed the seizure and has been trying to end the dispute ahead of the sale of its mobile phone business to Microsoft in a 5.4 billion euro ($7.4 billion) deal.

Nokia has said it wanted the factory seizure to be lifted by December 12 for the planned transfer of the business to Microsoft.

Nokia's case is one of several tax disputes involving foreign companies in India, which has stepped up its pursuit of claims against such firms as it seeks to rein in its budget deficit.

Companies recently involved in tax disputes in India include IBM, Royal Dutch Shell, Vodafone Plc and LG Electronics Inc.

In March, Nokia was served with a tax demand of about 20.8 billion rupees ($340.45 million) for five fiscal years starting from 2006-07, according to a March 22 notice on the Delhi High Court website.

Including the anticipated liability, or the tax bill for the years that have not been assessed by the authorities, the total liability could rise to roughly 75 billion rupees, said Mohan Parasaran, who is representing the tax department.

If Nokia loses the legal battle, it may have to pay as much as 210 billion rupees ($3.44 billion), which includes penalties and interest, Parasaran said. He declined to give additional details.   Continued...

 
Illustration picture shows Nokia logo on used cell phones, in Zurich, April 30, 2012. REUTERS/Christian Hartmann