2018 (10) TMI 488 - AT - Income Tax

Stay of demand - TDS u/s 194C - scope of the term person responsible for paying u/s 204 - assessee is engaged in the business of providing marketing and support services to Uber B.V. a company incorporated under the laws of Netherlands - tds on payouts/dues to the Driver-Partners - whether assessee is providing only support services and acting as collection and remittance agent and disburses the payment as per the instructions from Uber B.V? - Held that - During the course of hearing, the assessee submitted that the modus operandi of collecting the payments by the assessee on behalf of the Netherland company which are made by way of debit or credit cards or collecting by the Driver-Partners directly from the customers. It was also stated that there are practical difficulties as it is not possible for the assessee to collect TDS on the cash payments received by the Driver-Partners directly. During the hearing the assessee proved that the facts of the case were not properly and thoroughly examined and verified by the lower authorities. Thus demand raised by the revenue should be stayed subject to deposit of ₹ 20.00 Cr till the disposal of appeal by the tribunal so that the business of the assessee is not adversely impacted. We, therefore, are staying the demand for both the years subject to payment of ₹ 20 crores to be paid in three installments two ₹ 6.5 Cr on 15.10.2018 and 15.11.2018 and ₹ 7.00 Cr on 15.12.2018. The case of the assessee is also listed on an out-of-turn hearing on 11.12.2018. Penalty u/s 271C - Held that - The assessee has made out a prima facie case in favour of the assessee proving that the outcome of the appeal before ITAT will directly impact the proceedings which are hurriedly being finalized by the authorities below, which may entail huge liability by way of penalty on the assessee. In our opinion, so long as the appeal is pending before the Tribunal, the Revenue authorities should be restrained from passing any order imposing penalty on the assessee u/s 271C and 206AA of the Act however the proceedings may continue

Summary

Issues:
Stay of demand for Assessment Years 2016-17 and 2017-18, Applicability of TDS provisions u/s 194C of the Income Tax Act, Stay of penalty proceedings u/s 271C and 206AA of the Act.

Analysis:

Stay of Demand:
The assessee sought a stay of demand of ?24,92,16,591/- and ?84,13,13,665/- for Assessment Years 2016-17 and 2017-18, respectively. The Assessing Officer treated the assessee in default for not complying with TDS provisions under Sec. 194C of the Act. The assessee argued that it was not a "person responsible for paying" under Sec. 204 of the Act and therefore, not liable for TDS. The Tribunal, without delving into the merits of the case, stayed the demand subject to the deposit of ?20.00 Cr in three installments and listed the case for an out-of-turn hearing. The demand was stayed for 180 days, with conditions imposed on the assessee to ensure timely proceedings.

Applicability of TDS Provisions:
The assessee contended that it was not liable to deduct TDS under Sec. 194C as it was acting as a collection and remittance agent for a foreign company, Uber B.V. The assessee collected payments on behalf of Uber B.V and disbursed them to Driver-Partners as per the company's directions. The Tribunal acknowledged the practical difficulties faced by the assessee in collecting TDS on cash payments received by Driver-Partners directly. It directed the revenue to stay the demand subject to a partial deposit by the assessee to prevent adverse impacts on its business operations.

Stay of Penalty Proceedings:
Regarding penalty proceedings under Sec. 271C and 206AA of the Act, the Tribunal noted that the outcome of the appeal before ITAT would directly impact the penalty proceedings. It restrained the Revenue authorities from imposing penalties for six months or until the disposal of the appeal, citing precedents supporting such stays. The Tribunal allowed the penalty proceedings to continue but prohibited the imposition of penalties during the specified period.

In conclusion, the Tribunal granted the stay of demand, subject to conditions, and directed the Revenue authorities to refrain from imposing penalties until the appeal outcome. The decisions were made to safeguard the interests of the assessee and ensure a fair and just resolution of the legal matters.