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US court breather to Indian mission on tax issue

Last Updated: Tuesday, June 28, 2011 - 13:52

New York: The Indian mission in New York
will not have to pay taxes worth USD 42.5 million on its
property here, with the US Supreme Court upholding a Federal
Appeals Court decision to exempt taxes on property owned by
foreign governments.

In 2010, 2nd US Circuit Court of Appeals in Manhattan
upheld the State Department intervention in 2009, which
exempts 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 USD 42.5 million and Mongolia owed USD 4.4 million.

"It doesn`t matter what is fair or not fair," Aaron
Stiefel, the Indian mission`s lawyer, said, after the
Supreme Court denied New York City government`s petition
yesterday.

Stiefel underlined that the rule of reciprocity
applied to the case since US diplomatic buildings in India
were not taxed.

"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 had 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.

Stiefel said that the ruling would have a "financial
impact" on the city since more diplomatic buildings in the
future would also be exempt from paying tax.

PTI



First Published: Tuesday, June 28, 2011 - 13:52

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