The income tax (IT) department is bracing itself to issue an order of Rs 2,100 crore against Nokia – the mobile handset maker from Finland. The plea made by the company was dismissed by the commissioner for appeals regarding the fact that the payment done by the Indian branch to Nokia wasn’t a royalty.
Nokia challenged the tax demand in the Delhi HC by putting front the argument that the goods in question were the mere components used. That’s why should be seen as raw material. However, the argument from Nokia couldn’t satisfy the commissioner appeals. They also felt that there was some value in the IT department’s argument.
The Finnish company wasn’t very amused by the order brought out against it. Nokia said that it will make every possible effort to shield itself. Also a statement from the company says that it will keep all options under examination. One of the options includes referring the case to the High Court in Delhi.
The ministry of finance back in Finland has initiated MAP – the Mutual Agreement Procedure with its Indian equivalent. It comes under a bilateral Double Taxation Avoidance Agreement. Nokia is keeping that option open in the interest of the company.
India remains a very vital market for Nokia, especially after the recent releases like the Asha and the Lumia series. Nokia is also expected to fight the case all guns blazing.