ITAT: Uber India Cannot be Termed as ‘Person Responsible for Paying’ Driver Restaurant Partners

ITAT: Uber India Cannot be Termed as ‘Person Responsible for Paying’ Driver Restaurant Partners

The Income Tax Appellate Tribunal (ITAT), Mumbai by its division member bench of Sandeep Singh Karhail (Judicial Member) and Prashant Maharishi (Accountant Member) while ruling in favor of Uber India has held that Uber cannot be treated as a ‘person responsible for paying’ for the purpose of section 194C read with section 204 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), in respect of payment made to driver partners on behalf of the Uber BV for the transportation services.

An appeal was filed by the Dy. Commissioner of Income Tax against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2019–20.

The assessee in this case- Uber India System Private Ltd. (UISPL) incorporated in India in 2013 and claimed to be running the business of Uber BV. During the year, the main services provided by Uber BV through the assessee are taxi services and food delivery services.

A TDS verification survey was conducted in 2019 to ascertain the TDS defaults. During the course of verification carried out and on the basis of subsequent examination conducted in respect of the assessee, substantial defaults in the deduction of tax at source within the meaning of section 201(1)/201(1A) of the Act were noted.

The assessee was treated as assessee in default and a demand of Rs 146,72,40,645 was raised for failure to deduct tax at source under section 194C of the Act. The Assessing Officer-TDS (AOTDS) noted that Uber EATS is a food delivery App similar to Uber App and is a Restaurant Aggregator platform akin to Uber App being the ride-sharing platform.

The AO-TDS further noted that the business line of Uber EATS is the transport of food items, while for Uber App it is the transport of passengers. The AOTDS opined that the assessee was making substantial payments to driver partners, the restaurant partners, and the courier partners without deducting tax at source, thereby violating the provisions of Chapter XVIIB of the Act and more specifically section 194C r/w section 204 of the Act.

The Commissioner of Income Tax (Appeals) [CIT(A)] vide impugned order following the decision of the coordinate bench of the Tribunal in assessee’s own case for assessment years 2016-17 and 2017-18 set aside the order passed by the AO-TDS under section 201(1)/201(1A). Being aggrieved, the Revenue filed the appeal.

The only grievance of the Revenue was pertaining to the applicability of section 194C of the Act on payments made to driver-partners under the Uber App and payments made to the restaurant and courier partners under the Uber EATS App.

The ITAT noted that the coordinate bench of the Tribunal in assessee’s own case in M/s Uber India Systems Private Ltd vs JCIT-TDS, vide order dated March 4, 2021, for the assessment years 2016-17 and 2017-18 held that the assessee could not be treated as a ‘person responsible for paying’ for the purpose of section 194C read with section 204 in respect of payment made to driver partners on behalf of the Uber BV for the transportation services. Accordingly, the coordinate bench held that the assessee could not be treated as an ‘assessee in default’ under section 201(1)/201 (1A).

Furthermore, the bench found that the coordinate bench of the Tribunal in assessee’s own case in Uber India Systems Private Ltd vs. JCIT-TDS for the assessment year 2018-19, vide order dated January 30, 2023 rendered similar findings in respect of payment made to driver partners on behalf of the Uber BV for the transportation services.

In the year under consideration, the assessee provided taxi services as well as food delivery services in India through its mobile application.

“However, it is an accepted position that Uber EATS is a food delivery App on a similar pattern as Uber App and is a Restaurant Aggregator platform akin to Uber App being a ride-sharing platform. We find that the AO-TDS also rendered similar findings in respect of payments made under the food delivery services,” the ITAT averred.

Considering the fact that the Departmental Representative could not show any reason to deviate from the aforesaid decisions rendered in assessee’s own case and no change in law was alleged in the relevant assessment year, the ITAT held that the issue arising in the present appeal was recurring in nature and had been decided by the coordinate bench of the Tribunal in the preceding assessment years.

Thus, following the ratio passed by the coordinate bench of the Tribunal in assessee’s own case (supra), the ITAT found no infirmity in the impugned order passed by the CIT(A). Accordingly, the grounds raised by the Revenue were dismissed.