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2021 (3) TMI 326 - AT - Income TaxTDS u/s 194C - disbursements made to Driver-Partners on behalf of Uber B.V - non-deduction of tax at source - default u/s 201(1) / 201(1A) - person responsible for payment - Uber Technologies Inc. is a company incorporated in the United States of America and is the owner of the Uber Application ("Uber App") which provides lead generation services to independent Driver-Partners who are interested in providing transportation services to Riders ("Users") - Uber group had set up a subsidiary namely, Uber India Systems Private Limited (UISPL) in India ( i.e. the assessee company) on 16 August 2013 to market and promote the use of the Uber App in India and provide support services in connection with the same - HELD THAT:- Uber B.V. (through Uber India Systems Private Limited ("UISPL"), acting as its limited payment and collection service provider), also acts as the Driver-Partners' payment and collection agent, solely for the purpose of collecting the fare paid by the Users through digital modes, for the transportation services provided by the Driver-Partners and disbursing the same toDriver-Partner after deducting its Service Fee, if so required on an each trip basis by the User. This enables Users to electronically effect payment to the Driver-Partner for the transportation services rendered by the latter to the former. It is pertinent to note here that the Users can equally choose to pay by cash, which is paid directly to the Driver-Partners upon completion of the trip. The legislature in its wisdom had duly provided for the relevant provisions in the Act by specifically mentioning mere remitter of money to deduct tax at source as is provided in section 204(iv) of the Act, wherein, Drawing and Disbursing Officer (DDO) i.e. the remitter of money for Government, wherever required, need to deduct tax at source being person responsible for paying. The said provision is restricted to payment made by DDO on behalf of the Government and the same cannot be extended to other payments made by outsiders. Hence UISPL (i.e. the assessee company) being a mere remitter of collections made on behalf of the Driver-Partner at the direction of Uber B.V. cannot be held as the ‘Person responsible for paying’ within the meaning of section 194C read with section 204 of the Act. Applicability of provisions of section 194C - Uber B.V. is involved in rendering lead generation service to the Driver-Partner and transportation service is not provided by Uber B.V. or UISPL. The transportation service is provided by the Driver- Partner to the User for which the car is arranged by the Driver-Partner, all the expenses are incurred by the Driver-Partner, necessary permits and licenses are obtained by the Driver-Partner and the liability arising out of the transaction of transportation service is assumed by the Driver-Partner.Uber B.V. is neither responsible for providing transportation service nor any liability arising out of the transportation service provided by the Driver-Partners. The transportation service provided by the Driver-Partner to Users is a contract between them to which Uber B.V. is not a party. For providing lead generation service, the Driver-Partner pays a percentage of the ride fare as a service fee to Uber B.V. Therefore, it is clear that UISPL is not a part of the contract and no payment obligation is imposed either under the agreement with the Driver-Partner or under the agreement with the User. Hence it could be safely concluded that the provisions of section 194C of the Act are not applicable in the instant case of the assessee as – a) UISPL is not the person responsible for making payment b) UISPL has not entered into any contract with the Driver-Partners c) no ‘work’is carried out by the Driver-Partners for UISPL. We find that the ld. AR drew our attention to the fact that Uber B.V. has been recognized as an ‘aggregator’ under the Service Tax Law. Section 66B of Finance Act, 1994 provides that service tax to be paid at prescribed percentage on the value of services provided in India - one wing of the legislature has recognized Uber B.V. as an aggregator and not a service provider which again brings us to the same point that the transportation service is provided by Driver-Partner to Users directly for which User is making the payment and it is the User who is the person responsible for making payment. And, Uber B.V. and UISPL are not a party to the contract of transportation entered into between a User and a Driver-Partner. Principle of Consistency in the assessment made bv the Department - We find that the ld. AO while passing the assessment order under section 143(3) of the Act for the Asst Year 2016-17 dated 8.12.2018 had duly accepted the fact that UISPL is an entity engaged in the business of providing marketing and support services to Uber B.V. and not in the business of providing transportation service. Accordingly, no disallowance u/s 40(a)(ia) of the Act was made thereon. Even for earlier assessment years, i.e., AY 2014-15 and AY 2015-16, when the payment was collected and disbursed directly by Uber B.V. from an account outside India, Department has not invoked provisions of section 194C of the Act for the payments made to Driver-Partners in those years. Department has been consistently taking a view that the provision of section 194C of the Act are not applicable in the hands of UISPL and has assessed UISPL as a marketing and support service provider to Uber B.V. without making any disallowance under section 40(a)(ia). Hence, in the absence of any change in the facts and circumstances of the case, the department is not permitted to take a different view in the matter for the years under consideration. Conclusion: - UISPL cannot be treated as a ‘person responsible for paying’ for the purpose of section 194C read with section 204 of the Act, for more than one reason and also the provisions of section 194C of the Act cannot be made applicable thereon. Hence the assessee company i.e. UISPL cannot be treated as an ‘assessee in default’ and no order could be passed u/s 201 / 201(1A) of the Act in its hands for the years under consideration. - Decided in favour of assessee.
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