I-T dept rejects Nokia’s offer to pay `2,250 cr to unfreeze Chennai assets

Mumbai: More trouble seems to be brewing for Finnish handset maker Nokia.

In a Delhi High Court hearing on Monday, the company’s offer to pay Indian tax authorities a sum of `2,250 crore in connection with the unfreezing of the Chennai assets of Nokia India Pvt Ltd was rejected by the Income Tax department on grounds that the sum was barely a third of the `6,500 crore tax demand raised on the company.

The bench also questioned Nokia India’s intention behind sending `3,500 crore to its parent company as dividend of 18 years and asked why the amount should not be brought back to the country.

It is learnt that Nokia India, however, stuck to its offer, saying it is for the I-T department to decide whether it is better off with the proposed amount.

Nokia’s Chennai plant was frozen by the government at the end of September, in conjunction with the company’s failure to pay due taxes. However, in a bid to quickly dissolve of the case that directly impacts the Indian arm’s merger into the new Microsoft-Nokia entity – the deadline for the transfer of assets of which is December 12 -- Nokia has sought to pay some part of the tax demand.

Poonam Kaul, director- communications, Nokia IMEA, said, “Nokia will continue to cooperate with the government and the tax authorities on the ongoing tax case. Nokia reiterates that time is of the essence on the asset freeze issue. Nokia calls on the Indian government and tax authority to work with urgency so that the uncertainty about the site’s future can be dispelled before the deadline of December 12.”

Nokia also claims that the I-T department has been repeatedly changing the asking amount in the tax case – the earliest demand which stood at `10,000 crore.

Nokia shareholders have already approved of Microsoft’s takeover of Nokia, and the $7.2 billion deal has reached its final stages.

Courtesy:
Beryl Menezes @berylmenezes
Published Date:  Dec 03, 2013
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TALL ORDER - I-T panel rejects Nokia plea on 2,100cr tax demand

New Delhi/Mumbai: The income tax (I-T) department is readying to issue a demand of Rs 2,100 crore against mobile handset giant Nokia. The commissioner for appeals dismissed the company’s plea that the payment made by the Indian arm to the Finnish company was not royalty. Nokia had challenged the demand in Delhi high court and said the goods used were for components and should be treated as raw material.
    The commissioner appeals, however, found merit in the tax department’s argument, paving the way for a demand letter. While asking the commissioner appeals to issue an order by May 31, the HC had asked the department not to raise a demand for at least seven days. In addition, it has refrained the department from undertaking any coercive measures.
    Nokia said it was disappointed with the order and will examine all options to defend itself vigorously in this case and against any other Indian tax allegations. “Nokia is disappointed by the decision of the Commissioner of Income-tax (Appeals), and will now examine all options open to it. These include taking the case back to the Delhi high court,” the company said in a statement.
    “In addition to the legal action Nokia is taking in India, it is worth remembering that the ministry of finance in Finland has launched the Mutual Agreement Procedure with its counterpart in India under the bilateral Double Taxation Avoidance Agreement to reach a common understanding on the matter. Nokia will act quickly and decisively to protect its interests,” the company said.
    Sources said Nokia has the option of moving the Income Tax Appellate Tribunal (ITAT). The ITAT is likely to admit its stay petition but may ask the Finnish company to make an interim payment of 30% of tax. Sources say this is normal course of action that is generally followed by the ITAT.
Courtesy:
TIMES NEWS NETWORK
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Tax authorities action excessive, unacceptable: Nokia

Protesting survey operation by I-T department at its Chennai premises last month, mobile handset maker Nokia today said actions of tax authorities are excessive, unacceptable and "run counter" to Indian and international standards.

On January 8, the Income Tax Department officials had conducted a survey operation in the premises of the Finnish cellphone major in Chennai on charges of alleged tax evasion.

The company said it has not received any official information on the potential tax claims, and has only seen "wildly varying claims" from anonymous officials in the media.

"We do not see any merit in any of the claims, and are ready to defend ourselves vigorously," it added.

A company spokesperson said Nokia today filed letters of objection in India protesting against the actions taken by the Income Tax authorities at Chennai, which they "believe run counter to the domestic laws of India and international standards".

Among others, the letters have been filed with the Director of Income Tax (Investigation), Chennai, and the Director General of Income Tax (Investigation), Tamil Nadu.

As a company with operations around the globe, Nokia said, it believes the actions of the tax authorities in "Chennai are excessive, unacceptable and inconsistent" with Indian standards of fair play and governance.

"Specifically, in tax investigations like this, local standards would prohibit government officials from entering the factory premises and Nokia IT systems without valid authorisation and questioning individual employees for intolerably long periods of time, even after they have fully cooperated with the authorities," the spokesperson added.

Nokia said since the opening of the tax investigation on January 8, it has cooperated fully with Indian officials, and has responded to all queries raised, extending full support in completing the investigation.

"Nokia notes its position is that it is in full compliance with local laws as well as the bilaterally negotiated tax treaty between the Governments of India and Finland, as far as withholding tax on supply of operating software is concerned," the spokesperson said.

Nokia said it will cooperate fully with Indian Tax authorities in accordance with all applicable laws when "they share their claims directly with us".

"Nokia has enjoyed a long and fruitful relationship with India, and we look forward to a prompt and just resolution to this matter," said the company which is present in India for past 17 years.
COURTESY:
New Delhi, Feb 12, 2013 (PTI)
http://www.deccanherald.com/content/311631/tax-authorities-action-excessive-unacceptable.html

Tax Scam : I-T officials survey Nokia plant

Chennai: More than 20 income tax department officials descended on the Nokia India plant in Sriperumbudur and its offices here on Tuesday for a survey. The survey, conducted on the suspicion that the company has not been paying tax on the payments made to its parent company in Finland for the past seven years, was continuing when reports last came in.

“A survey is being conducted on the premises of the Nokia plant by the investigating wing of our department,” income tax chief commissioner (Chennai) S Senthamarai Kannan said. “In a search operation, the business and residential premises are searched but, a survey is done only on the business premises,” he said. A clear picture would emerge in a couple of days, he said.

In an official release, Nokia said, “Tax officials visited Nokia’s manufacturing unit in Chennai. Nokia is fully cooperating to ensure they get the necessary information to help in the inquiry. As a global company, Nokia consistently fields a large and steady number of tax queries, audits and assessments. Nokia’s commitment to being a good corporate citizen is firm and unwavering: we always observe applicable laws and rulings in the countries where we operate. This has been a core principle of our operations in India, where Nokia has been present since 1995.”
Courtesy:
TIMES NEWS NETWORK
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