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Petitioner appears to contend further that the interest at
issue in the Horbury transaction is exempt from U.S. taxation un-
der article VIII(1) because it qualifies for the grandfathering
provided by Rev. Rul. 85-163, 1985-2 C.B. 349.129 In that ruling,
the Commissioner announced that the holdings of Rev. Rul. 84-152,
1984-2 C.B. 381, and Rev. Rul. 84-153, 1984-2 C.B. 383, are not
to be applied to interest payments made in connection with, inter
alia, debt obligations issued prior to October 15, 1984.130 In
Rev. Rul. 84-152, supra, the Service concluded that, where
(1) the foreign parent of a controlled group of corporations lent
funds to its wholly owned Netherlands Antilles subsidiary,
(2) that subsidiary relent those funds to a wholly owned domestic
subsidiary of that parent, and (3) the Netherlands Antilles
subsidiary was a conduit for the passage of interest payments by
that domestic subsidiary to its foreign parent, those interest
payments were not exempt from U.S. taxation under the U.S.-Neth-
erlands treaty as extended to the Netherlands Antilles. In Rev.
Rul. 84-153, supra, the Service concluded that, where (1) a
129 Rev. Rul. 95-56, 1995-36 I.R.B. 20, renders Rev. Ruls. 85-
163, 1985-2 C.B. 349, 84-152, 1984-2 C.B. 381, and 84-153, 1984-2
C.B. 383, obsolete for payments made after Sept. 10, 1995, that
are subject to the final regulations under sec. 7701(l), T.D.
8611, 60 Fed. Reg. 40997 (Aug. 11, 1995).
130 Petitioner's contention presumes that Rev. Ruls. 84-152,
supra, and 84-153, supra, apply to the interest at issue in the
Horbury transaction. We have not relied upon those revenue
rulings in reaching our holdings with respect to the Horbury
transaction. Rather, we have relied upon the substance over form
doctrine, the facts and circumstances disclosed by the record,
and petitioner's failure of proof.
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