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Nokia renews legal battle in India to move assets to Microsoft

February 13, 2014

By Ritsuko Ando, Jason Neely and Ruth PItchford

HELSINKI (Reuters) – Nokia said on Wednesday it plans to challenge a Delhi High Court ruling that is blocking the transfer to Microsoft of assets related to its mobile phone business.

One such asset – a plant in the southern Indian city of Chennai – is among Nokia’s biggest phone-making factories. Local authorities seized it last year in a tax dispute, blocking its transfer to Microsoft which bought Nokia’s mobile phone business.

Nokia agreed in December to place 22.50 billion rupees into an escrow account and pay for any additional tax claims once all legal avenues had been exhausted, but the Delhi High Court ruled on February 5 that it must pay deposits on local authority tax claims as these claims are made.

A company spokesman said Nokia made its latest appeal to India’s Supreme Court.

Nokia could continue running the plant as a contract manufacturer for Microsoft if an asset transfer is blocked, but the company wants to quit the mobile phone business to concentrate on selling network equipment.

The planned 5.4 billion euro sale to Microsoft had been expected to close before the end of the first quarter but the tax dispute looks set to drag on for longer.

Nokia’s board chairman and interim CEO Risto Siilasmaa is meeting Indian ministers in New Delhi on Wednesday and Thursday.

India is also in a $2 billion tax dispute, which began in 2007, with Britain’s Vodafone Group Plc VOD.L.

(Reporting by Ritsuko Ando; Editing by Jason Neely/Ruth PItchford)