Passenger carriage under Section 44B includes qualifying round-trip cruise operations despite ancillary on-board hospitality and entertainment services.

Section 44B of the Income-tax Act is explained as applying to a non-resident operating ships for passenger carriage, with income computed on a presumptive basis from relevant carriage receipts. The notes state that carriage need not end at a different port: a round-trip cruise may qualify, including where passengers disembark at intermediate ports. Hospitality and entertainment provided on board are treated as ancillary to cruise operations and do not alter the principal character of passenger carriage. The discussion therefore treats qualifying cruise operations as falling within the presumptive-income regime.

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Issues: Whether a non-resident cruise operator conducting round-trip voyages, with hospitality and entertainment services on board, carries on the business of operating ships for carriage of passengers so as to be governed by the presumptive-income regime under Section 44B of the Income-tax Act, 1961.

Analysis: Section 44B applies to a non-resident engaged in the business of operating ships and provides for presumptive computation of income from amounts paid or payable for carriage of passengers, livestock, mail or goods. A requirement that carriage must invariably involve movement from one distinct port to another is unduly restrictive. A round-trip voyage comprises carriage notwithstanding its return to the originating port, particularly where passengers may disembark at intermediate ports. On-board hospitality and entertainment are ancillary to the principal activity of operating the cruise and do not displace its character as carriage of passengers. The concurrent factual findings recognising the cruise operator's qualifying activity disclosed no basis for interference.

Conclusion: The cruise operator was engaged in the business of operating ships for carriage of passengers and was entitled to computation of its income at the presumptive rate under Section 44B of the Income-tax Act, 1961; the issue is in favour of the assessee.

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