India was fighting with New York city for the last seven years over the tax issue. New York city filed suit in 2003 seeking $16.4 million from India and $2.1 million from Mongolia for what it claims are unpaid real estate taxes on residential space.
On Tuesday, Aug 17, the ruling by Federal Second Circuit Court of Appeals in Manhattan allows India to overcome the paying of huge taxes and interest. The Federal court rejected a lower court's ruling, in 2008, that India owed $42.5 million in taxes related to a 26-story tower in Manhattan near the United Nations with 20 floors of apartments occupied by diplomatic employees.
"Certainly, we are thrilled with the result. It is a complete victory and we got everything we wanted," said Aaron Stiefel, a lawyer who represented India and Mongolia in the litigation.
However, Michael Cardozo, New York City Corporation Counsel told that city would take the case to the US Supreme Court.
"We are extremely disappointed that the court has upheld the State Department"s extraordinary exercise of power to nullify New York City"s right, as previously upheld by the courts, to impose New York City real estate taxes on foreign missions," said Cardozo.