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deference under Chevron U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837 (1984). As a permissible
construction, the regulation is ipso facto not manifestly
contrary to the statute.
Petitioner also mounts an argument based on the previously
quoted passage from the committee reports that cites instances
where “a treaty reduces the tax” (emphasis added). Petitioner
argues that Congress thereby intended to distinguish between
reductions and eliminations of tax by treaty, citing respondent’s
maintenance of that distinction in other contexts. Therefore,
the argument goes, Congress intended to authorize regulations in
the case of reductions, but not eliminations, of tax by treaty,
such as exist in the instant case. For the same reasons just
outlined, petitioner’s argument must fail. Even if petitioner’s
interpretation were the better one, it cannot be said that
respondent’s position in the challenged regulation-–to the effect
that the committee report’s use of “reduction” encompasses
“elimination” of tax by treaty-–is an impermissible construction
of the statute. Under the Chevron doctrine, respondent’s
position prevails.
B. Treaty Nondiscrimination Provision
Petitioner argues in the alternative that section 1.267(a)-
3, Income Tax Regs., as applied in this case violates Article
24(3) of the 1967 Treaty (Article 24(3)).
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