The income tax department has frozen the shares owned by real estate company Unitech Ltd in its mobile phone joint venture with Norway's Telenor, the joint venture said on Wednesday, citing notices from the tax authorities.

The joint venture, which operates under the Uninor brand name, said in a statement the stake was owned by three units of Unitech, but did not elaborate. It said the move would not have any effect on its operations.

Two sources with direct knowledge said the tax office had "attached" the shares over a tax demand on the Unitech units related to a deal with Telenor, in which the Norwegian company had taken a majority stake in the telecom venture.

One of the sources said Unitech had challenged the tax demand.

Unitech declined to comment, while a spokeswoman for the tax office was not immediately available for comment.

The joint venture is among the companies that are set to lose their cellular licences in early June after the Supreme Court last month ordered all 122 licences awarded in a scandal-tainted 2008 sale to be revoked.

Telenor, which had bought into the Indian venture after the licences had been awarded, has accused partner Unitech of "fraud and misrepresentation" and wants to migrate the business to a new venture and seek fresh licences in an auction.

Unitech is opposing Telenor's move and both sides have appealed to the Company Law Board, a quasi-judiciary body.

Telenor owns 67.25 per cent of the joint venture, while Unitech owns the remainder. The joint venture ranks eighth in a market of 15, with 41 million subscribers as of February.

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