Court favours NYC in tax dispute over Indian mission

India and Mongolia's stand that they are immune from paying taxes on properties they own in New York suffered a major setback today when the US Supreme Court upheld decisions by lower courts that the American judiciary can decide this issue.

New York City is demanding $16.4 million from India and $2.1 million from Mongolia as back-taxes for their missions to the UN.

By a 7-2 ruling, the Supreme Court rejected the claim by the two countries that they are immune from paying the taxes on the properties which are partly used for residential purposes by its diplomats.

The law "does not immunise a foreign sovereign" in such circumstances, wrote Justice Clarence Thomas. No immediate comment was available from the Indian Mission.

The Indian Permanent Mission to the UN is located in a 26-storey building in midtown Manhattan in New York City. The building is party used for diplomatic offices on the first six floors and the remainder as residence for its diplomatic staff.