DIRECTOR OF INCOME TAX Vs. NOKIA NETWORKS OY

JUDGEMENT

(1.) SOME of these appeals filed by the Nokia Network OY (hereinafter referred to as ,,the assessee) and some filed by the Director of Income-Tax (hereinafter referred as to ,,the Revenue) pertain to assessment year 1997-98 and 1998-99.

(2.) THE assessee, a company incorporated under the laws of Finland, is a leading manufacturer of advanced telecommunication systems and equipment (GSM equipment) which are used in fixed and mobile phone networks. During the previous year relevant to assessment years 1997-98 and 1998-99, Nokia maintained a Liaison Office and also had a subsidiary in India, presently known as Nokia India Private Limited (hereinafter referred to as NIPL). During this period, GSM equipment manufactured in Finland was sold to Indian telecom operators from outside India on a principal to principal basis, under independent buyer-seller arrangements. Installation activities were undertaken by Indian subsidiary under its independent contracts with Indian telecom operators. Nokia, being a tax resident of Finland, is governed by the provisions of India-Finland Double Taxation Avoidance Agreement. Assessment under Section 143 (3) was completed, in the following manner:-

(3.) THE questions of law on which ITA 512/ 2007 was admitted would cover all the appeals of the Department, and therefore, we are reproducing those questions hereunder:-