EMBASSY OF THE UNITED STATES OF AMERICA, New Delhi, September 12, 1989. His Excellency, DR. N.K. SENGUPTA, Secretary (Revenue), Ministry of Finance, New Delhi. 　　EXCELLENCY: I have the honor to refer to the Convention between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income which was signed today (hereinafter referred to as "the Convention") and to confirm, on behalf of the Government of the United States of America, the following understandings reached between the two Governments: Both sides agree that a tax sparing credit shall not be provided in Article 25 (Relief from Double Taxation) of the Convention at this time. However, the Convention shall be promptly amended to incorporate a tax sparing credit provision if the United States hereafter amends its laws concerning the provision of tax sparing credits or the United States reaches agreement on the provision of a tax' sparing credit with any other country. 　　Both sides also agree that, for purposes of paragraph 4(c) of Article 5 (Permanent Establishment) of the Convention, a person shall be considered to habitually secure orders in a Contracting State, wholly or almost wholly for an enterprise, only if: 　　1. such person frequently accepts orders for goods or merchandise on behalf of the enterprise; 　　2. substantially all of such person's sales-related activities in the Contracting State consist of activities for the enterprise; 　　3. such person habitually represents to persons offering to buy goods or merchandise that acceptance of an order by such person constitutes the agreement of the enterprise to supply goods or merchandise under the terms and conditions specified in the order; and 　　4. the enterprise takes actions that give purchasers the basis for a reasonable belief that such person has authority to bind the enterprise. 　　I have the honor to request Your Excellency to confirm the foregoing understandings of Your Excellency's Government. 　　Accept, Excellency, the renewed assurances of my highest consideration. 　　　　　　　　　　　　　　　　　　　　　　　　　JOHN R. HUBBARD, 　　　　　　　　　　　　　　　　　　　　　　　　　Ambassador. 　　　　　　　　　　　　　　　　　　　　　　　　　GOVERNMENT OF INDIA, 　　　　　　　　　　　　　　　MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, 　　　　　　　　　　　　　　　　　　　　New Delhi, September 12, 1989. His Excellency, Dr. JOHN R. HUBBARD, Ambassador of the United States of America, New Delhi. 　　EXCELLENCY: I have the honour to acknowledge receipt of Your Excellency's Note of today's date, which reads as follows: 　　"I have the honor to refer to the Convention between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income which was signed today (hereinafter referred to as "the Convention") and to confirm, on behalf of the Government of the United States of America, the following understanding reached between the two Governments: 　　Both sides agree that a tax sparing credit shall not be provided in Article 25 (Relief from Double Taxation) of the Convention at this time. However, the Convention shall be promptly amended to incorporate a tax sparing credit provision if the United States hereafter amends its laws concerning the provision of tax sparing credits, or the United States reaches agreement on the provision of a tax sparing credit with any other country. 　　Both sides also agree that, for purposes of paragraph 4(c) of Article 5 (Permanent Establishment) of the Convention, a person shall be considered to habitually secure orders in a Contracting State, wholly or almost wholly for an enterprise, only if: 　　1. such person frequently accepts orders for goods or merchandise on behalf of the enterprise; 　　2. substantially all of such person's sales-related activities in the Contracting State consist of activities for the enterprise; 　　3. such person habitually represents to persons offering to buy goods or merchandise that acceptance of an order by such person constitutes the agreement of the enterprise to supply goods or merchandise under the terms and conditions specified in the order; and 　　4. the enterprise takes actions that give purchasers the basis for a reasonable belief that such person has authority to bind the enterprise." 　　I have the honour to confirm the understandings contained in Your Excellency's Note, on behalf of the Government of the Republic of India. 　　Accept, Excellency, the renewed assurances of my highest consideration. 　　　　　　　　　　　　　　　　　　　　　　　　　　　　 　N.K. SENGUPTA, 　　　　　　　　　　　　　　　　　　　　　　　　　　　　 　Secretary.