US Supreme Court rejects NYC plea to tax Indian mission properties

New York: The US Supreme Court has upheld a decision by a lower court that had exempted the Indian and Mongolian diplomatic missions from paying taxes of nearly $50 million on their properties in the city of New York.

In 2010, the 2nd US Circuit Court of Appeals in Manhattan upheld a US State Department intervention in 2009, which exempted taxes on property owned by foreign governments and UN missions that housed diplomatic staff.

In 2008, a federal district judge had ruled that India, which owns a 26-story property near the United Nations owed $42.5 million and Mongolia owed $4.4 million.

"While there is perhaps some unfairness to the City when the federal government retroactively declares property taxes imposed by the City against foreign countries to be null and void, this unfairness inheres in the federal government's unquestioned supremacy in the management of foreign relations," the judges wrote in the judgment.

The State Department argued that if foreign properties in the US were taxed, then the US would have to pay millions of dollars on taxes for its own diplomatic buildings in many countries.

"It doesn't matter what is fair or not fair," Aaron Stiefel, the India mission's lawyer, told media after the Supreme Court denied NYC's petition. Stiefel underlined that the rule of reciprocity applied to the case since US diplomatic buildings in India were not taxed.