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applies an entirely new yield to all of the branch's assets not
just to the additional imputed assets. Prior sections 819(a) and
813, on the other hand, imputed additional income for just those
deemed assets.
We recognize that a convention, like a constitution, is a
dynamic instrument, drafted to take account of changing
conditions and expectations. See Day v. Trans World Airlines,
Inc., 528 F.2d at 35; Maximov v. United States, 299 F.2d at 568.
If we were to accept respondent's argument, however, the United
States could, through various amendments to the Internal Revenue
Code, always eliminate unilaterally the separate-entity
principles in Article VII, paragraph (2) without ever violating
the Canadian Convention.
Nor are we are persuaded that the circumstances herein are
exceptional. While paragraph 23 does not prescribe when
circumstances are considered exceptional, we do have other
guidance as to when such circumstances may exist. Paragraph 11
of the Model Commentaries states that:
11. In the great majority of cases, trading accounts
of the permanent establishment * * * will be used by
the taxation authorities concerned to ascertain the
profit properly attributable to that establishment.
Exceptionally there may be no separate accounts (cf.
paragraphs 23 to 27 below). * * * [Emphasis added.]
The above language suggests that other methods may only be
adopted when a permanent establishment does not have any
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