A treatment of N-(3-acetoxy-4-benzyloxyphenethyl)-4-benzyloxy-3-methoxyphenylpropionamide (17) with phosphoryl chloride gave 1-(3-acetoxy-4-benzyloxyphenethyl)-imino-6-benzyloxy-5-methoxyindane (21) instead of the normal product, 3, 4-dihydroisoquinoline (20). The structure of 21 was determined by chemical method and by an alternative synthesis of the indane derivative (25) derived from 21.