Reuters: A court extended a hearing over local tax authorities’ seizure of a Nokia factory by seeking information on the plant value, adding to concerns whether the company can transfer the property to Microsoft as part of the sale of its mobile phone business.

Nokia has offered to pay a €270 million deposit to authorities to unfreeze assets in a tax dispute, according to sources familiar with the matter.

The Finnish firm has been trying to free up the assets, particularly its Chennai factory which is one of its biggest phone-making plants, ahead of the sale of its mobile phone business to Microsoft.

The Delhi high court on Tuesday asked the tax authorities to submit the value of the Chennai factory on Wednesday, when it is due to hear the case again, amid growing uncertainty about Nokia’s exact tax liabilities in India.

A lawyer for the tax department said on Tuesday Nokia owed Rs7,800 crore in tax payments.

The Times of India reported on Tuesday the tax department had informed the Delhi high court that Nokia owned the authorities more than Rs21,000 crore, which included penalty for a seven-year period beginning 2006.

The final sum of tax liabilities are not yet known. But in March, it was served with a tax demand of about Rs2,080 crore for five fiscal years starting from 2006/07, according to a 22 March notice on the Delhi high court website.

Nokia said it had not been served with any claim beyond that Rs2,080 crore amount.

“In recent months we have seen and read about many claims from the tax authorities," the company said in a statement on Tuesday. “We feel they are without merit and will defend ourselves vigorously in court."

While Nokia has said it does not expect the dispute to affect its €5.4 billion deal with Microsoft, which is expected to close in the first quarter of 2014, a lengthy asset freeze could complicate matters by preventing the transfer of ownership in the Chennai plant.

Nokia has said it wanted the assets to be released by 12 December.

Meanwhile, Indian and Finnish finance ministry officials on Tuesday discussed Nokia’s Rs21,153 crore tax dispute case and reviewed the double taxation avoidance agreement.

“Finnish finance ministry officials met Indian finance ministry officials on Nokia case today. The meeting was inconclusive, both sides presented their views. Both sides also reviewed India-Finland DTAA," a senior finance ministry official said on Tuesday. REUTERS

PTI contributed to this story

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