The Income Tax (I-T) department today said it has found prima facie defaults by Finnish handset maker Nokia's Chennai plant in TDS deductions on royalty payments made to its parent company.

During searches conducted by the department at the Nokia's Sriperumpudur factory yesterday, it was also observed that the company had changed its accounting model and also was in the process of reorganising the existing business model to bypass certain direct and indirect tax liabilities.

"Some more clarifications have been sought from the executives of the company," an I-T release said.

The department seized "some important" evidence having a bearing on the tax implications of the company, it said but added further investigation was required before reaching final conclusion on the tax liability.

"It has been gathered during the survey operations that Nokia India has been making remittances to its parent company Nokia OY as payments for software supplies since 2005. The above payments for software would attract TDS as per the provisions of the Income Tax Act 1961", it said.

"But it is learnt that the assessee company has not made any TDS on the above software payments", it said.

Nokia India had said yesterday that it was fully cooperating with the IT department to ensure officials get the necessary information.