Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) was already facing restriction from the Indian court on transferring its Chennai Factory to Microsoft Corporation (NASDAQ:MSFT) following the deal worth $7.2 billion back, in September 2013, and now the 2010-11 accounts of Nokia will undergo special audit as determined by the income tax department in India.
Nokia accounts doubted
The sources reveal that a special audit will be done in depth as the officials doubt the company of considerable suppression” of the income. Investigation will also include the transactions between Nokia India and Nokia Finland, according to Financial Times.
Tussle between Nokia Corporation (ADR)(NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) India and Indian tax department is not new, and started last year, when the officials started enquiring about the company for transferring funds to its parent company under the head “payment for supplying software” since 2005-06. Tax on the company started mounting and reached to huge amount of INR 21,000 crore.
However, snag for Nokia Corporation (ADR)(NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) does not ends here as the company is facing another INR 2,400 crore value tax notice charged by the Tamil Nadu government. According to sources, in a special audit under section 142 (2A) of the Income Tax Act, “there are several defects, anomalies, discrepancies and irregularities (in the accounts of Nokia India).”
In its profit and loss account, Nokia showed the gross receipt of INR 26,000 crore and expenses were recorded at INR 25,000 crore. Taxable Income claimed by the company in return for a particular year came in at INR 694.97 crore.
Unending troubles for Nokia
Nokia Corporation (ADR)(NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) was given the facility of explaining it to the department that why a special audit against the company’s account should not be carried out. However, the officials ordered for the audit on March 28 appointing a reputed chartered accountancy firm to carry out an audit and give a result in 120 days.
According to the report of Financial Express, Supreme Court espoused the decision of Delhi High Court’s December 12 order whereby Nokia will have to fulfill 16 conditions before transferring Chennai plant to Microsoft.
Nokia Corporation (ADR)(NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is required to deposit INR 2,250 crore in an escrow account. According to the reports, the CA form will look into if the firm has “maintained books of accounts and financial statements on the basis of which correct profits can be allowed as deductions” under the provisions of the Act.