Won’t be able to comply with Tamil Nadu government's Rs 2,400 crore tax claim, Nokia tells Madras HC

CHENNAI: Nokia’s India unit told the Madras High Court that it would not be able to comply with a proposal to deposit money into an escrow account in a tax issue with the state government, citing liquidity problems.

Nokia, whose devices and services unit is being bought by Microsoft, received Rs 2,400-crore tax claim from the Tamil Nadu government which alleged that it avoided taxes on devices sold within India. Nokia approached the court, saying the claims are baseless. The case, which came up for hearing just 10 minutes before the closing hours, is being keenly followed by employees who are worried that the company’s tax woes will come in the way of the Chennai unit’s takeover by Microsoft.

Nokia’s senior counsel Arvind Datar told the court that Nokia India is facing liquidity issues, since it has already paid Rs 780 crore to the income tax department in FY14. The mobile handset maker has been fighting anotherRs 21,000-crore claim by the income tax department over royalty payments made to its parent company in Finland.

Datar was responding to Justice BRajendran’s query whether Nokia India can deposit a part of the amount claimed by the state government into an escrow account. The judge wanted to know if Nokia India can park at least 5% (about Rs 120 crore) of the amount?