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Nokia asks Indian court to release factory seized in tax dispute

A customer speaks on his mobile phone as he comes out of a Nokia showroom in New Delhi March 28, 2013. REUTERS/Mansi Thapliyal

By Ritsuko Ando

HELSINKI (Reuters) - Nokia has asked the Delhi High Court to help release its Indian factory after its seizure by the local tax authorities, the Finnish firm said on Thursday as it seeks to resolve the tax dispute ahead of the sale of its mobile phone business to Microsoft.

Nokia said it did not expect the dispute to affect its 5.4 billion euros ($7.3 billion) deal with Microsoft, although it was prepared for the possibility that the Chennai plant, one of its biggest phone-making factories, will not be transferred to the U.S. company in time for the sale, which is due to close in the first quarter of next year.

If the seizure is still in place when the Microsoft deal is finalized, Nokia could briefly operate the plant as a contract manufacturer for Microsoft, according to sources close to the company.

Nokia has been in disagreement with the Indian authorities over an income tax bill of 20.8 billion rupees ($333 million), one of several tax disagreements involving foreign companies in India.

In a statement, Nokia said it wanted the assets to be released by December 12. The sources said the court will hold a hearing on November 28. ($1=0.7428 euros) ($1=62.5450 Indian rupees)

(Additional reporting by Devidutta Tripathy in New Delhi; Editing by Greg Mahlich)