On Thursday, the Delhi High Court passed a ruling that Nokia Oyj could now allow the transfer of its phone factory in Microsoft, which is part of the tech giant's $7.4 billion sale agreement of the Finnish company-s mobile handset business. The Indian court also added that in lieu of the ruling, Nokia needs to set aside funds for potential tax liabilities in the amount of $365 million.

The phone factory is located in the southern part of Chennai, and is also considered as one of the largest handset manufacturing plants by Nokia, The York Times said in its report. The Chennai-based factory, along with Nokia's other assets in India, were seized in September by the government of India due to tax dispute. The assets were frozen by the Indian tax authorities.

Despite the ruling, the tax battle between Nokia and the Indian government has not been concluded, said the report. The state of India in March issued a bill of around $340 million in back taxes spanning five fiscal years to Nokia's local unit.

KPMG India deputy chief executive Dinesh Kanabar said, "It is a positive move forward that Nokia has been allowed to go through with its asset sale. It was worrisome that a hypothetical demand from the Indian tax office was becoming a barrier to a global transaction." Kanabar added that it was not clear what the ultimate tax liability of Nikia would be, and that it could be decided by the Indian courts and tax tribunals.

Kanabar, who said that he had spoken with a lawyer that represented the Finnish firm, said Nokia Finland was asked by the Delhi High Court to make a $365 million deposit in escrow with India's tax department as interim payment. The court was said to have stated that the amount might be more should the government find that local assets could fetch a higher value upon assessment. The court also clarified that Nokia will still be liable to any remaining tax bills from the asset that the Finnish company will be selling to Microsoft.