I-T dept to slap fresh demand notices on Nokia

In more trouble for Finnish mobile firm Nokia, whose immovable assets were attached in an alleged tax evasion case recently, the Income Tax department is set to issue fresh demand notices for payment of taxes to the tune of Rs 1,000 crore (Rs 10 billion).

The department, according to sources, has also "prioritised" the tax demand notices on the firm pertaining to assessment years of 2011-12 and 2012-13 so that the "interest of the revenue" is not jeopardised against the backdrop of the current tax litigation with the company and the proposed acquisition of the mobile-phone maker by US giant Microsoft.

Sources privy to the tax case of Nokia said the firm's assets were frozen not only for the purpose of obtaining revenue with regard to the earlier demand of Rs 2,080 crore (Rs 20.80 billion), but also in connection with the forthcoming demand notices, which could be issued "as soon as assessment proceedings finish within 2013."

"The estimated fresh tax liability on the firm could be about Rs 1,000 crore and the I-T procedures will be followed in this regard," the sources said. When contacted by PTI, Nokia said it is unaware of any such forthcoming action and it was not in a position to comment on a prospective move.

"Nokia's longstanding policy is not to comment on market speculation, but we can say that we are unaware of any such claim from the income tax authorities.

"Nokia operates with transparency in its business transactions and is committed to resolving the outstanding issues with Indian tax authorities in accordance with all applicable laws. We are, however, also ready to defend ourselves vigorously as needed," a statement from the official spokesperson of the company said. 

The I-T department, sources said, has fast-tracked the case as it involves a huge tax amount and because last time, the firm moved dividend funds without informing the tax authorities in the competent range in Chennai. The department was taking no chances, they said.

"The provisions in the I-T Act give tax authorities immense provisions to keep a check on any case of potential loss of revenue via the assets of the assessee going under dispute or outside the jurisdiction of the country," sources said.

The Delhi High Court recently restrained Nokia from selling or transferring its ownership rights in India relating to movable and immovable assets in the alleged tax evasion case.

A bench of justices Sanjiv Khanna and Sanjeev Sachdeva, while hearing a plea of Nokia India Pvt Ltd against the Income Tax department's recent order attaching (freezing) all its 15 bank accounts, also asked the handset firm to inform the assessing officer two days in advance before repatriating any money abroad.

The bench also asked the company not to transfer dividend abroad without its permission. The court, however, granted minor relief to Nokia, saying it "will be entitled to receive debt-created receivables, loans and advances but the amount so received will be deposited in the bank accounts mentioned in sub para...of the impugned order."

The alleged tax evasion pertains to royalty payment made against supply of software by the company's parent, which attracts a 10 per cent levy under the tax-deducted-at-source category.