Microsoft deal: SC asks Nokia, I-T Dept to 'find a way out'

The revenue authorities are demanding Rs 2,800 cr as TDS

The Supreme Court today asked Nokia India and the income tax authorities to “find a way out” of the imbroglio in the Microsoft Corp buying the Indian arm of the company in its $7.5 billion global deal. Since the issues are complex, the court posted it for next Tuesday for further hearing, without passing any order.

Nokia has appealed to the court against the Delhi high court order which imposed certain conditions on Nokia India and its Finnish parent, which the company argued were illegal.

Counsel for the firm, Mukul Rohtagi, told a bench headed by Justice Anil Dave that the deal was going on between the Finnish mobile devices manufacturer and Microsoft Corp. If the deal over the Indian firm’s Chennai plant falls through because of the income tax disputes, it will have harsh consequences.

There are 35,000 jobs at stake in the Chennai manufacturing plant and the government will lose future taxes and royalty too. If the deal does not go through the plant will be closed down, counsel said. If it is not sold as a running concern, the amount fetched will be far below the expectations as it is a software company.

Counsel said that Rs 2,800 crore demanded by the revenue authorities as TDS can be solved and the parties have agreed on that to some extent. For the rest, the company is willing to give guarantee against attachment.

Solicitor General Mohan Parasaran, appearing for the tax authorities, submitted that the company has already moved the high court for modification of the order. After hearing the company for an hour, the court asked the parties to negotiate and bring a proposal next week to end the dispute.

The high court, in its order last December, allowed the sale of Indian assets after imposing certain conditions, which are opposed by Nokia. Apart from depositing the tax dues in an escrow account, the order further asks Nokia Finland to  be bound by the statement that they shall be jointly liable and shall pay tax demand determined under the Indian Act with interest and penalty.