(1) Income derived by a resident of a Contracting State from the operation of ships in international traffic shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph 1 of this Article and Article 15 of the Agreement between the Government of the Republic of India and the Government of the Union of Soviet Socialist Republics on merchant shipping, dated 19th July, 1976, income derived by a resident of a Contracting State from the operation of ships between the ports of the other Contracting State and the ports of third countries (in both directions) may be taxed in that other State, but the tax imposed in that other State shall be reduced by an amount equal to two thirds thereof.
(3) The provisions of paragraph 1 of this Article shall also apply to income from participation in a pool, a joint business or an international operating agency engaged in the operation of ships.
(4) For the purposes of this Article:
- (a) interest on funds connected with the operation of ships in international traffic shall be regarded as income from the operation of such ships and the provisions of Article 11 shall not apply in relation to such interest; and
- (b) income from the operation of ships includes income derived from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic.