My client is the Indian agent of a foreign cruise ship that sails round trips out of Mumbai. The Assessing Officer says a cruise is entertainment and hospitality, not carriage of passengers, so s.44B does not apply and he wants the s.195 withholding worked out on 25% of the fare instead of 7.5%. Can he do that?
It depends on the findings of fact, and on these facts he could not. The Supreme Court refused to confine 'carriage' in s.44B to movement from one port to a different port, and held that ancillary services provided on a voyage do not take the activity outside the section. The concurrent findings of the CIT(A), the Tribunal and the Bombay High Court that the non-resident ship owner was carrying passengers were left undisturbed, so the deduction under s.195 stood on the statutory presumptive rate of 7.5% of gross cruise fare receipts and not on the 25% the Assessing Officer had estimated. The Revenue's appeals were dismissed.
Decided by the Supreme Court (Supreme Court of India - S.V.N. Bhatti J (who authored the judgment) and N.V. Anjaria J) on 2026-07-30, reported as 2026 INSC 771 - Civil Appeal Nos. 3334-3336 of 2012, assessment years 2006-07, 2007-08 and 2008-09, decided with the companion Civil Appeal arising out of SLP (C) No. 1440 of 2016 (Director of Income Tax (IT)-I v. Superstar Libra Limited), for a different assessment year that the judgment does not identify. The judgment is marked NON-REPORTABLE and states no reporter citation.. It bears on section 44B, section 195 of the Income Tax Act 1961, in Presumptive Taxation & Audit, TDS Defaults and How Tax Law Is Read matters.
The department's line against cruise operators is that a round trip that begins and ends at the same port is not carriage at all - the passenger ends where he started, so what was sold was entertainment and hospitality, and the presumptive rate in s.44B is unavailable. If that argument runs, the base for a s.195 withholding certificate stops being 7.5% of gross receipts and becomes whatever margin the Assessing Officer estimates; here he estimated 25%. This judgment refuses the restrictive reading and says in terms that ancillary services on a voyage do not take away from the meaning of 'carriage'. Its weight comes from the fact-findings below rather than from any general construction: the Court said it was not defining 'carriage' but examining its application to the facts (para 14), it declined to disturb concurrent findings, and the judgment is marked non-reportable.
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Superstar Libra Ltd, a non-resident entity, operated a cruise called 'Superstar Libra' in India. Star Cruises (India) Pvt Ltd was its agent, responsible for conducting the cruise and collecting the revenue from the sale of cruise packages and shore excursions in India, and it remitted that revenue to the owner. For the assessment years 2006-07, 2007-08 and 2008-09 the assessee sought a certificate under s.195 on the footing that the owner's income was to be computed under s.44B, that is at 7.5% of the cruise fare collected, on the basis that what the agent received was for the carriage of passengers operated by the owner. By order dated 30 March 2007 the Assessing Officer held that s.44B applies to the carriage of goods and passengers, that 'carrying' means taking or transporting from one place or port to another, and that because the cruise originated and terminated at Mumbai Port as a round trip during which hospitality and entertainment were extended, the activity was entertainment and hospitality rather than carriage; he estimated deemed income at 25% of the cruise fare instead of 7.5%. The CIT(A), Mumbai, allowed the assessee's appeal on 15 June 2007 and set the assessment order aside, holding the deemed income to be 7.5% of the cruise fare receipts. The Tribunal dismissed the Revenue's appeal on 1 July 2009, and the High Court of Judicature at Bombay dismissed the Revenue's further appeals by its order dated 1 July 2011 in Income Tax Appeal Nos. 485, 486 and 683 of 2010. The Revenue appealed to the Supreme Court, where leave was granted on two questions: whether the High Court was justified in upholding the Tribunal's decision that the assessee is engaged in the business of operation of ships and entitled to be assessed under s.44B, and whether it was justified in doing so without appreciating that the business activity was primarily providing hospitality and entertainment on board rather than mere transportation of passengers.
The restrictive meaning the Assessing Officer gave to 'carriage' was noted with disapproval, and the view taken for the subject assessment years - that s.44B is attracted to the estimated income of the non-resident owner - did not warrant interference (paras 14 and 16). 'The Civil Appeals fail and are accordingly dismissed' (para 17), pending applications standing disposed of; the companion appeal arising out of SLP (C) No. 1440 of 2016, for a different assessment year, was dismissed by adopting the same view.
The Court set out the Revenue's case that a round trip with amenities is not a simple carriage of passengers, that the dominant purpose of the owner's activity was conducting packages and excursions with tourists, and that even if the twin conditions of s.44B were satisfied the 7.5% estimation still depended on the activity being carriage (para 12); and the assessee's case that s.44B turns on a twin test satisfied on concurrent findings, that the Assessing Officer had wrongly required carriage to be from Port A to Port B, that the CIT(A) had rejected that limited interpretation, and that making an ancillary purpose the dominant purpose was erroneous (para 13). It then fixed the limits of what it was deciding: in these appeals it was 'not defining the meaning of the word ‘carriage’, but we are examining its application to the facts of the case', and it noted the Assessing Officer's construction with disapproval (para 14). On the substance, it found it difficult to confine 'carriage' as the Assessing Officer had; the Appellate Authority and the Tribunal, being the competent authorities to examine the facts in issue, had held that the activity established did not fall outside the expression 'carriage' in s.44B; the finding recorded was that the Assessing Officer had not taken into account the possibility of passengers de-boarding at intermediate ports; and the providing of ancillary services on a voyage does not take away from the meaning of 'carriage', the restrictive meaning having been factually corrected by the orders below (para 15). Declining to reiterate the reasoning below, the Court was satisfied that the view taken for the subject assessment years did not warrant interference (para 16). The Tribunal's own route - that a round trip is two separate acts of carriage, that one-way cruises were also sold and round-trip passengers could disembark at intermediate ports, that booking slips showed the fees were for cabin and transport with entertainment incidental, and that CBDT Circulars No. 763 dated 18 February 1996 and No. 169 dated 23 June 1975 support treating s.44B as a simplifying provision for foreign shipping enterprises - is set out in the Court's summary at para 8 and is not separately examined by the Court.
On a voyage, the providing of ancillary services does not take away from the meaning of ‘carriage’ as per Section 44B of the Act.
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Handle my notice → Ask a CA on WhatsAppIt depends on the findings of fact, and on these facts he could not. The Supreme Court refused to confine 'carriage' in s.44B to movement from one port to a different port, and held that ancillary services provided on a voyage do not take the activity outside the section. The concurrent findings of the CIT(A), the Tribunal and the Bombay High Court that the non-resident ship owner was carrying passengers were left undisturbed, so the deduction under s.195 stood on the statutory presumptive rate of 7.5% of gross cruise fare receipts and not on the 25% the Assessing Officer had estimated. The Revenue's appeals were dismissed. This was decided by the Supreme Court (Supreme Court of India - S.V.N. Bhatti J (who authored the judgment) and N.V. Anjaria J) and bears on section 44B, section 195 of the Income Tax Act 1961. It is reported as 2026 INSC 771 - Civil Appeal Nos. 3334-3336 of 2012, assessment years 2006-07, 2007-08 and 2008-09, decided with the companion Civil Appeal arising out of SLP (C) No. 1440 of 2016 (Director of Income Tax (IT)-I v. Superstar Libra Limited), for a different assessment year that the judgment does not identify. The judgment is marked NON-REPORTABLE and states no reporter citation.. The department's line against cruise operators is that a round trip that begins and ends at the same port is not carriage at all - the passenger ends where he started, so what was sold was entertainment and hospitality, and the presumptive rate in s.44B is unavailable. If that argument runs, the base for a s.195 withholding certificate stops being 7.5% of gross receipts and becomes whatever margin the Assessing Officer estimates; here he estimated 25%. This judgment refuses the restrictive reading and says in terms that ancillary services on a voyage do not take away from the meaning of 'carriage'. Its weight comes from the fact-findings below rather than from any general construction: the Court said it was not defining 'carriage' but examining its application to the facts (para 14), it declined to disturb concurrent findings, and the judgment is marked non-reportable. If it applies to you, the first step is this: Build the record on the facts the Tribunal actually relied on: booking slips showing the fare collected was for cabin and transport, evidence that one-way cruises are also sold, and evidence that a round-trip passenger may disembark at an intermediate port without being compelled to return (paras 8A and 8B).
Superstar Libra Ltd, a non-resident entity, operated a cruise called 'Superstar Libra' in India. Star Cruises (India) Pvt Ltd was its agent, responsible for conducting the cruise and collecting the revenue from the sale of cruise packages and shore excursions in India, and it remitted that revenue to the owner. For the assessment years 2006-07, 2007-08 and 2008-09 the assessee sought a certificate under s.195 on the footing that the owner's income was to be computed under s.44B, that is at 7.5% of the cruise fare collected, on the basis that what the agent received was for the carriage of passengers operated by the owner. By order dated 30 March 2007 the Assessing Officer held that s.44B applies to the carriage of goods and passengers, that 'carrying' means taking or transporting from one place or port to another, and that because the cruise originated and terminated at Mumbai Port as a round trip during which hospitality and entertainment were extended, the activity was entertainment and hospitality rather than carriage; he estimated deemed income at 25% of the cruise fare instead of 7.5%. The CIT(A), Mumbai, allowed the assessee's appeal on 15 June 2007 and set the assessment order aside, holding the deemed income to be 7.5% of the cruise fare receipts. The Tribunal dismissed the Revenue's appeal on 1 July 2009, and the High Court of Judicature at Bombay dismissed the Revenue's further appeals by its order dated 1 July 2011 in Income Tax Appeal Nos. 485, 486 and 683 of 2010. The Revenue appealed to the Supreme Court, where leave was granted on two questions: whether the High Court was justified in upholding the Tribunal's decision that the assessee is engaged in the business of operation of ships and entitled to be assessed under s.44B, and whether it was justified in doing so without appreciating that the business activity was primarily providing hospitality and entertainment on board rather than mere transportation of passengers. The matter was decided on 2026-07-30 by the Supreme Court (Supreme Court of India - S.V.N. Bhatti J (who authored the judgment) and N.V. Anjaria J). On those facts the Supreme Court held as follows. The restrictive meaning the Assessing Officer gave to 'carriage' was noted with disapproval, and the view taken for the subject assessment years - that s.44B is attracted to the estimated income of the non-resident owner - did not warrant interference (paras 14 and 16). 'The Civil Appeals fail and are accordingly dismissed' (para 17), pending applications standing disposed of; the companion appeal arising out of SLP (C) No. 1440 of 2016, for a different assessment year, was dismissed by adopting the same view.
The Court set out the Revenue's case that a round trip with amenities is not a simple carriage of passengers, that the dominant purpose of the owner's activity was conducting packages and excursions with tourists, and that even if the twin conditions of s.44B were satisfied the 7.5% estimation still depended on the activity being carriage (para 12); and the assessee's case that s.44B turns on a twin test satisfied on concurrent findings, that the Assessing Officer had wrongly required carriage to be from Port A to Port B, that the CIT(A) had rejected that limited interpretation, and that making an ancillary purpose the dominant purpose was erroneous (para 13). It then fixed the limits of what it was deciding: in these appeals it was 'not defining the meaning of the word ‘carriage’, but we are examining its application to the facts of the case', and it noted the Assessing Officer's construction with disapproval (para 14). On the substance, it found it difficult to confine 'carriage' as the Assessing Officer had; the Appellate Authority and the Tribunal, being the competent authorities to examine the facts in issue, had held that the activity established did not fall outside the expression 'carriage' in s.44B; the finding recorded was that the Assessing Officer had not taken into account the possibility of passengers de-boarding at intermediate ports; and the providing of ancillary services on a voyage does not take away from the meaning of 'carriage', the restrictive meaning having been factually corrected by the orders below (para 15). Declining to reiterate the reasoning below, the Court was satisfied that the view taken for the subject assessment years did not warrant interference (para 16). The Tribunal's own route - that a round trip is two separate acts of carriage, that one-way cruises were also sold and round-trip passengers could disembark at intermediate ports, that booking slips showed the fees were for cabin and transport with entertainment incidental, and that CBDT Circulars No. 763 dated 18 February 1996 and No. 169 dated 23 June 1975 support treating s.44B as a simplifying provision for foreign shipping enterprises - is set out in the Court's summary at para 8 and is not separately examined by the Court. In the words reproduced by the source cited on this page: "On a voyage, the providing of ancillary services does not take away from the meaning of ‘carriage’ as per Section 44B of the Act." The decision followed or applied No earlier decision is cited in the judgment. CBDT Circular No. 763 dated 18.02.1996 and Circular No. 169 dated 23.06.1975 appear only in the Court's summary of the Tribunal's findings (para 8C)..
It was decided by the Supreme Court on 2026-07-30 and is reported as 2026 INSC 771 - Civil Appeal Nos. 3334-3336 of 2012, assessment years 2006-07, 2007-08 and 2008-09, decided with the companion Civil Appeal arising out of SLP (C) No. 1440 of 2016 (Director of Income Tax (IT)-I v. Superstar Libra Limited), for a different assessment year that the judgment does not identify. The judgment is marked NON-REPORTABLE and states no reporter citation.. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 44B, section 195, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The restrictive meaning the Assessing Officer gave to 'carriage' was noted with disapproval, and the view taken for the subject assessment years - that s.44B is attracted to the estimated income of the non-resident owner - did not warrant interference (paras 14 and 16). 'The Civil Appeals fail and are accordingly dismissed' (para 17), pending applications standing disposed of; the companion appeal arising out of SLP (C) No. 1440 of 2016, for a different assessment year, was dismissed by adopting the same view. It arises in Presumptive Taxation & Audit, TDS Defaults and How Tax Law Is Read matters, on section 44B, section 195 of the Income Tax Act 1961, and was decided by Supreme Court of India - S.V.N. Bhatti J (who authored the judgment) and N.V. Anjaria J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the on-board entertainment in its place as incidental to the business of operating ships, whether it is bundled in the fare or charged separately, and keep it capable of being shown that way from the documents rather than by assertion (para 8B). Show the twin conditions of s.44B on the face of the record - a non-resident, engaged in the business of operating ships - because both the assessee's argument and the Court's answer proceeded on those conditions being satisfied as a matter of fact (paras 13 and 15). In the s.195 application, set out the s.44B computation and ask for the certificate on 7.5% of the cruise fare collected, as the assessee did here (para 4), instead of leaving the Assessing Officer to estimate a rate of his own. Cite this against the port-A-to-port-B reading of 'carriage' and for nothing wider. It is non-reportable, it expressly declines to define the word (para 14), and it turns on concurrent findings of fact that a differently-recorded case will not have.
Still good law. A judgment of the Supreme Court delivered on 30 July 2026, so it holds unless a larger Bench or an amendment displaces it. No search for later treatment was run in this pass - the entry was written from the judgment text alone - so nothing here should be read as a check that it has not since been explained, distinguished or overtaken; the source page's own 'Cited by 0' counter is not that check either. What would displace it: a larger Bench deciding the meaning of 'carriage' in s.44B, or a statutory change to the presumptive scheme for non-resident shipping. Because the judgment is non-reportable and rests on concurrent findings of fact, a later case on a differently-recorded set of facts may go the other way without disturbing it. That finding was checked against a published source, which is linked on this page, on 2026-09-05. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment is marked NON-REPORTABLE, on its own first page and again on the companion judgment printed after it, and it is short: eighteen brief paragraphs of which paras 14 to 16 are the whole of the Court's own reasoning. It should not be made to carry more than that. The Court decided not to define 'carriage' (para 14) and declined to interfere with concurrent findings of fact, so this is an affirmance on the facts of one cruise operator, not a construction of s.44B. Everything in this entry is taken from the judgment text; nothing is added from a digest or from memory. The file states no reporter citation, so `reported` carries only the neutral citation 2026 INSC 771, the appeal numbers and the assessment years. The companion appeal's number is left blank in the file ('CIVIL APPEAL NO. OF 2026 @ SPECIAL LEAVE PETITION (C) NO. 1440 OF 2016', Director of Income Tax (IT)-I v. Superstar Libra Limited) and its assessment year is not stated, only that it is different from the three before the Court. The amounts remitted, the tax at stake and the text of s.44B are nowhere set out in the judgment. The judgment names no earlier decision at all; the only authorities mentioned are two CBDT circulars, and they appear in the Court's summary of the Tribunal's findings (para 8C), not in its own reasoning. It does not tell you what 'carriage' means. The Court said so itself (para 14), so the next cruise case has to be won on its own facts - and the facts that carried this one are specific: one-way cruises were also sold, and round-trip passengers could disembark at intermediate ports without being compelled to return (para 8A). A voyage with no intermediate disembarkation and no one-way tickets is not answered here. It does not decide how a composite cruise fare is to be broken up, or whether receipts from shore excursions, or on-board entertainment charged separately, enter the base on which the 7.5% is computed; the Tribunal's point about handling charges and the two CBDT circulars is only recorded (para 8C), not examined. It does not deal with the assessee's own position as agent - what it owed as agent, or its own taxable income - the dispute being only the rate at which it was to withhold on remittances to the owner. It says nothing about how s.44B sits with a treaty, and nothing about whether the non-resident could have shown lower actual profits. It does not set out the text of s.44B, the sums remitted, or the tax at stake, and it does not state the corresponding provision of the Income-tax Act 2025. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The restrictive meaning the Assessing Officer gave to 'carriage' was noted with disapproval, and the view taken for the subject assessment years - that s.44B is attracted to the estimated income of the non-resident owner - did not warrant interference (paras 14 and 16). 'The Civil Appeals fail and are accordingly dismissed' (para 17), pending applications standing disposed of; the companion appeal arising out of SLP (C) No. 1440 of 2016, for a different assessment year, was dismissed by adopting the same view.
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