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
http://epaper.dnaindia.com/story.aspx?id=56081&boxid=29826&ed_date=2013-12-03&ed_code=820009&ed_page=13

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:
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नोकिया को आईटी का 2000 करोड़ का नोटिस

नई दिल्ली।। आयकर विभाग ने मोबाइल हैंडसेट बनाने वाली फिनलैंड की कंपनी नोकिया को 2,000 करोड़ रुपए का टैक्स नोटिस भेजा है। यह नोटिस भारत में कंपनी के कारोबार से जुड़े लेनदेन से संबंधित है।

हालांकि, दिल्ली हाईकोर्ट ने इस मामले में अंतरिम रोक लगा दी है। नोकिया ने आयकर विभाग के आदेश को अदालत में चुनौती दी है। आयकर विभाग के सूत्रों ने गुरुवार को कहा कि विभाग ने गत 21 मार्च को नोकिया को नोटिस भेजकर 2,000 करोड़ रुपए जमा कराने को कहा था।

नोकिया ने टैक्स नोटिस मिलने की पुष्टि करते हुए कहा है कि उसके बिजनेस ऑपरेशंस में कानूनों का पूरी तरह पालन किया जाता है। नोकिया के प्रवक्ता ने बयान में कहा, 'कंपनी भारतीय आयकर विभाग से नोटिस मिलने की पुष्टि करती है। कंपनी का मानना है कि उसने स्थानीय कानूनों का पूरी तरह पालन किया है। उसने भारत और फिनलैंड के बीच बायलैटरल निगोसिएटेड टैक्स टी्रटी के हिसाब से काम किया है। कंपनी इस मामले में मजबूती से अपना पक्ष रखेगी।''

कंपनी ने अपने बयान में कहा है, 'इस मामले में नोकिया ने पिछले सप्ताह दिल्ली हाईकोर्ट में याचिका दाखिल की थी। अदालत ने 22 मार्च को आयकर विभाग को नोटिस जारी करते हुए जवाबी हलफनामा दाखिल करने को कहा। उसने टैक्स की मांग पर अंतरिम स्टे दे दिया। अगले आदेश तक नोकिया से टैक्स नहीं वसूला जा सकता।'

विभाग के सूत्रों ने कहा, 'आयकर विभाग जल्द ही दिल्ली हाई कोर्ट में अपना जवाब दाखिल करेगा। विभाग इस तरह के टाइम बाउंड नोटिस जारी करने के लिए अधिकृत है।' आयकर विभाग ने जांच के बाद यह नोटिस जारी किया था। विभाग ने इस साल जनवरी में चेन्नै में मौजूद कंपनियों के ठिकानों में सर्वे ऑपरेशन करने के बाद यह कदम उठाया। सूत्रों ने बताया कि विभाग ने कंपनी के बही-खातों की जांच 2006 से ही की है।
साभार:
इकनॉमिक टाइम्स | Mar 29, 2013, 09.00AM IST
http://navbharattimes.indiatimes.com/business/tax/tax-news/it-notice-of-2000-cr-to-nokia/businessarticleshow/19262210.cms

Shell India Tax demands likely to hit sentiment

MNCs, Individual Taxpayers Get Notices Despite Disputes Being Settled
New Delhi: A spate of high profile tax demands on several multinational companies (MNCs) such as Shell, Nokia and Vodafone has the potential to hurt sentiment and experts said investors are hoping that the Budget will have some steps to ensure fair dispute resolution. It is not only companies which are being targeted, even individual taxpayers have come under the taxman’s scrutiny. Several taxpayers have been served notices despite disputes being settled. The tax department, which is facing slowing revenues, has unleashed several demands in the past few weeks, attracting strong criticism and the firms have vowed to challenge the notices.

Experts said the government’s efforts to assure investors have taken a knock with these notices and firms are anxious about fresh developments. “The fact is that revenue collection pressure gets translated down to officers. The high pitch assessment has reached a level of absurdity,” said Gokul Chaudhri, partner with tax consultancy firm BMR Advisers. “The question is how do you bring back investor confidence in this environment? There is uncertainty in the mind of the investor community,” Chaudhri said, adding that all eyes are on the Budget to see whether finance minister P Chidambaram reassures investors and announces an action plan for dispute resolution.

Chidambaram has taken several measures to assure investors about the stability of India’s tax policies after the impact of some tax proposals in 2012-13 scared investors to the sidelines. The government has deferred implementation of the controversial General Anti Avoidance Rules (GAAR) to 2016 and vowed to provide a non-adversarial tax environment.

“At a conceptual level things are looking positive with the government deferring GAAR and accepting recommendations of the Rangachary committee. However, there seems to be a disparity between the policy level and the ground level reality,” said Dinesh Kanabar, deputy CEO of consulting firm KPMG. He said a part of the problem lies in the stiff targets set for revenue officials which translated to such steep tax demands. “The need is to expand the tax base,” Kanabar said.

Telecom giant Vodafone and Shell India have said they will challenge the tax notices, while Finnish telecom giant Nokia has said actions of the tax authorities were “unacceptable and inconsistent with Indian standards of fair play and governance”. “Shell India’s considered view is that the transfer pricing order is based on an incorrect interpretation of the Indian tax regulations and is bad in law as this is a capital receipt on which income tax cannot be levied. Funding of a subsidiary through issue of shares is common in India and globally,” Shell India chairman Yasmine Hilton has said.

“Taxing the money received by Shell India is in effect a tax on FDI, which is contrary not only to law but also to the spirit of the recent global trip by the finance minister to attract further FDI into India,” Hilton has said. Slowing economic growth has put pressure on revenues and authorities are struggling to keep the fiscal deficit within the targeted 5.3% of gross domestic product. Revenue officials are under pressure to meet the tax targets set for the year.

FUELLING CONTROVERSY
The tax department, which is under pressure to meet targets set for the year, has unleashed several demands in the past few weeks, attracting strong criticism

While Vodafone and Shell India plan to challenge the tax notices, Nokia has said actions of the tax authorities were “unacceptable and inconsistent with Indian standards of fair play and governance”

“There seems to be a disparity between the policy level and the ground level reality,” said Dinesh Kanabar, deputy CEO of consulting firm KPMG, adding that a part of the problem lies in the stiff targets set for revenue officials which translated to such steep tax demands
COURTESY:
TIMES NEWS NETWORK
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/02/14&PageLabel=21&EntityId=Ar02101&ViewMode=HTML