Home ECONOMY Paving way for sale to Microsoft, HC defreezes Nokia’s assets

Paving way for sale to Microsoft, HC defreezes Nokia’s assets

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New Delhi, Dec 13:

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In a major relief to mobile handset maker Nokia, the Delhi High Court Thursday lifted the Income Tax department’s order attaching its assets in India, including a major manufacturing facility in Chennai, clearing the way for the company to sell its business to Microsoft Corporation.

A division bench of Justice Sanjiv Khanna and Justice Sanjeev Sachdeva allowed the sale of assets by Nokia India to Microsoft on it fulfilling certain conditions aimed at protecting the claims of the Income Tax department.

Nokia had pleaded before the high court for a direction to the Income Tax department for lifting of the stay on transfer of assets, including the Chennai manufacturing plant, in view of its $7.2 billion global deal with Microsoft.

The court made it clear that Nokia India and its parent company Nokia Corporation, Finland, will be jointly liable to pay tax demand of the Income Tax department to the extent permissible and recoverable under the provisions of the Income Tax Act.

“We permit and allow sale of assets by Nokia India to Microsoft/Microsoft International,” the bench said.

“Nokia Finland will be bound by the statement that they shall be jointly liable and shall pay tax demand determined and payable under Income Tax Act.”

The court directed Nokia to deposit a minimum of Rs.2,250 crore in an escrow account, saying “details of which will be furnished to the IT department within one month of the agreement with Microsoft/Microsoft International”.

“The amount of deposit will go up or increase upon higher consideration being received from Microsoft as per valuation report,” the court said.

The court further said that in case of an adverse assessment or reassessment order or tax demand being created against Nokia India under the Income Tax Act, the demand will be paid from the escrow account.

In case the total amount due and payable by Nokia Finland is less than Rs.3,500 crore and Nokia India is unable to pay dues from the escrow account, Nokia Finland will have to pay the amount but, not exceeding Rs.3,500 crore.

This amount was fixed as dividend of Rs.3,500 crore which stands paid by Nokia India to Nokia Finland earlier this year.

(IANS)