The Delhi High Court provided a big relief to the Indian arm of Finnish handset maker Nokia by issuing an interim stay on income-tax (I-T) department's Rs 2,080-crore tax demand.

The tax department issued the tax demand order to Nokia in mid-March and the handset maker received it last week. The company challenged the order in the Delhi High Court, which issued an interim stay on it on last Friday.

The mobile phone company said in a statement, "On Friday, March 22, the court has issued notice to the income tax department to file its counter-affidavit and has granted interim stay of the entire tax demand raised against Nokia till further orders."

The company claimed that it was in full compliance with Indian laws as well as the tax treaty signed by the governments of Finland and India, adding that it would defend itself strongly.

However, the once popular handset maker also stressed that it would cooperate with Indian authorities.

The tax demand raised by the Indian authorities pertains to Nokia's Indian operations during a five-year period starting 2006-07. The tax department is vigorously chasing companies in a bid to meet its net tax collection target of Rs 7.4 lakh crore before the end of this financial year on March 31.