Supreme Court Dismisses Income Tax Appeal Against Nokia Over Gross Delay Of 286 Days
Kirit Singhania
17 April 2026 6:10 PM IST
The Supreme Court on Thursday dismissed the Income Tax Department's appeal against Nokia Corporation over a 286-day delay, leaving undisturbed the Delhi High Court's ruling that offshore supply of telecom equipment is not taxable, software payments are not royalty, and no permanent establishment existed in India.
A Bench of Justices B.V. Nagarathna and Ujjal Bhuyan found no sufficient and satisfactory reason by the department to condone 286 days 'gross' delay and observed the following:
“There is a gross delay of 286 days in filing this Special Leave Petition. The reasons assigned are neither satisfactory nor sufficient in law so to condone the delay. Hence, the application seeking condonation the delay is dismissed.”
The dispute arose from assessment proceedings for AYs 1997-1998 onwards involving Nokia Networks OY, a Finland-based telecom equipment manufacturer. Nokia had established a liaison office in India in 1994 and later incorporated an Indian subsidiary in May 1995. While telecom equipment was supplied from outside India under offshore contracts, installation and related services were undertaken by the Indian entity under separate agreements.
The Assessing Officer on March 2, 2000, held that Nokia had a PE in India, attributed profits to it, treated software payments as royalty, and added notional interest on delayed payments.
The Delhi High Court in its earlier judgment dated September 7, 2012, held that offshore supplies were not taxable and that the liaison office was not a PE, remanding certain issues.
On the department's appeal, the high court's division bench on February 21, 2025 ruled in favour of Nokia, holding that offshore supply was not taxable and that neither the liaison office nor the Indian subsidiary constituted a PE. It observed that the liaison office carried out only preparatory or auxiliary activities and did not constitute a PE and that the Indian subsidiary could not be treated as a dependent agent PE merely due to shareholding or support functions.
With the dismissal of the SLP over a delay of 286 days, the Delhi High Court's ruling remains undisturbed
For Petitioner: N Venkataraman, A.S.G., Sudarshan Lamba, AOR, Advocates Surender Sinha, V C Bharathi, Rahul Arya, Sushant Singh
For Respondent: Advocates Deepak Chopra, Ankul Goyal, Tanvi Aggarwal