Nokia's Chennai plant would remain attached as Supreme Court junks its plea
Mobile handset manufacturer Nokia's plans to transfer its Chennai plant to Microsoft suffered a setback as the Supreme Court Friday dismissing its plea against the Delhi High Court order asking its parent company Nokia Finland to undertake to meet any future tax liability for its India operations which are being folded up.
A bench of Justice Anil R.Dave and Justice Shiva Kirti Singh passed the order after it declined to accept Nokia's plea that the attachment of its assets by the income tax department be lifted and it would deposit Rs. 2,250 crore or net sale consideration it would receive from Microsoft for its assets whichever is higher.
The dismissal of Nokia's plea would put obstacles in the transfer of its Chennai plant which is part of $7.2 billion global deal between Nokia and Microsoft International involving the former's devices and services business changing hands.
Besides other conditions including an undertaking by Nokia Finland, the high vourt had asked Nokia India to put Rs.2,250 crore in an escrow account.
This deposit of amount that Nokia offered to make before the apex court was within 15 days of the receipt of sale amount from Microsoft.
Nokia, in its plea, said that it would approach the tax authorities for their approval for the transfer of its assets to Microsoft along with final valuation of its Indian assets.
At the outset of the hearing, the court expressed its disapproval of Nokia submitting its internal valuation of its Chennai plant and not one by an expert as directed by the court on Thursday.
"Who has valued the property? We had told you to submit a valuation report from an authorised valuer. We wanted some authentic report. This is a Nokia report,"1 said Justice Dave disapproving the report submitted by Nokia's counsel Vikas Srivastava.
Reiterating some of the arguments that Nokia has been making ever since it moved the apex court about falling value of its Chennai plant with the passage of time, Srivastava said that the projected tax demand is about Rs.22,0000 crore was more than the total worth of its Indian and global operations.
The court said that there was something "fishy" as Solicitor General Mohan Prasaran told it that Nokia India had made no profits but it gave Rs.3,500 crore dividend to its parent company by taking money from its reserves.
"(There were) No profits. Dividends were paid. Dividends were paid from reserves. It appears fishy," observed Justice Dave.
Prasaran told the court that the tax demand of Rs.2,649 crores was a determined demand. Besides this, Rs.10,149 crore tax demand was the barest minimum that would be raised and it was coupled with interest and liabilities.
(Posted on 14-03-2014)
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