India’s Delhi High Court issued an interim ruling on Thursday that sets the stage for Microsoft (MSFT) to take possession of Nokia‘s (NOK) cellphone factories in the country.
Tax authorities in India had frozen the Finnish handset manufacturer’s assets over allegations that the company improperly claimed certain software export tax exemptions. The court’s decision means that Nokia — which is selling its handset business to Microsoft — can transfer the facilities to the American software giant after it makes a $365 million deposit payment to India’s tax agency, the Wall Street Journal notes.
India’s tax agency says that Nokia may be liable for back taxes amounting to as much as $3.4 billion. The court unfroze the assets, but ordered Nokia to give back a $567 million dividend paid by its Indian subsidiary this year, and required the Finnish company to promise to pay future taxes assessed against it.
Microsoft is set to acquire Nokia’s cellphone factory in Chennai, which produces more than 20 handset models. The facility, which employes about 8,000 workers, was built in 2004.
Nokia is one of a growing number of international businesses that are fighting additional tax demands in Indian courts in recent years, including BMW, IBM (IBM) and Vodafone (VOD).