Offer for Nokia’s Chennai plant very little: I-T Dept to High Court
The submission was made by the I-T department before a bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva while seeking an urgent hearing of a plea filed by Nokia which has sought permission to sell the assets as it had found a prospective buyer.
The department mentioned the matter before the bench for an early hearing as it could not be taken up on Thursday. The court, however, refused to hear it on Friday and told the department to file an application if it wants the matter to be heard before the next date of hearing on September 7.
It also asked the department on what basis it was claiming the amount offered for Nokia’s Chennai plant was very little. An arm’s length transaction is one in which the buyer and seller of a product act independently and have no relationship to each other to ensure that they act according to their self-interest and are not influenced by the other party. Nokia on April 17 had submitted before the court and IT department the name of the prospective buyer and the offer made in a sealed cover. The court had on that date asked the department to examine if the offer was acceptable and if not, then it should consider appointing an independent valuer to carry out valuation of the plant and related assets.
Another alternative the court had suggested was to put up the assets for auction, by making the amount offered as a reserve price, saying “ultimately we have to maximize the price”. The department on Friday told the court that the offer amount is very little and if the unit and related assets were sold, it would be difficult to recover the tax amount which it has tentatively placed at Rs 10,000 crore.
According to the I-T department, the amount is for only one assessment year and there are other assessment years. It had earlier told the court that as per previous orders, Nokia or its parent company in Finland had to secure the department up to an amount of Rs 3,500 crore, but the same has not been done yet.
Nokia had earlier argued before the court that each day the assets remain attached and unused, their value decreases and suggested the department is free to sell it and take the sale amount towards the company’s tax liability. It had said it met all the “players” in the market and finally was able to find an “arm’s length buyer” for its assets, but had said it cannot confirm whether the buyer will buy the assets if too much time lapses. The High Court in December 2013 had de-freezed Nokia’s assets and allowed the company to sell them subject to fulfillment of certain conditions including safeguarding the IT department for a minimum of Rs 3,500 crore. The alleged tax evasion pertains to royalty payment made against supply of software by its parent company.