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TMI Blog2023 (4) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... gs 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. DR could not show us 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 issue arising in the present appeal is recurring in nature and has been decided by the coordinate bench of the Tribunal in the preceding assessment years. Decided against revenue. - ITA no.126/Mum./2023 - - - Dated:- 26-4-2023 - Shri Prashant Maharishi, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Hiten Chande For the Revenue : Shri Ankush Kapoor ORDER PER SANDEEP SINGH KARHAIL, J.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er B.V. is actually providing food deliver services to customers in India through its digital platforms Uber Eats and its revenue in India are determined by the number of orders Received/delivered through its Uber Eats App? 2. Whether on the facts and in the circumstances of the case and law, the Ld. CIT(A) failed to appreciate that the amendment u/s 204(v) of the IT Act was in nature of explaining the meaning of the expression Person responsible for paying in the context wherein the payment was made by a resident on behalf of a non-resident and therefore these provisions have a retrospective application. 3. Whether on the facts and in the circumstances of the case and law, the Ld. CIT(A) has erred in relying on the conclusion of hon'ble ITAT that UISPL was not a Person responsible for paying in terms of section 204 of IT Act has led to absurd situation, wherein even Uber B.V./ Uber Portier B.V. would not qualify as Person responsible for paying even though a payment is being made to driver partners, restaurant partners courier parnters for the rendition of services in India in terms of agreement with Uber B.V./ Uber Portier B.V., and therefore the amendment u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Three-sided marketplace i.e., a Courier Partner, a Restaurant Owner, and a Customer with the Uber EATS platform at its center. Its activities involve placing the order for food items by the customer through the Uber EATS Application, picking up the order from the restaurants by the Uber EATS delivery partner (Courier Partner), and delivery of the order to the customer/user. The money is collected for the food and its delivery from the customer, who makes the payment to the Courier Partner. The said amount towards the delivery of food is handed over to the restaurant partner. 6. A TDS verification survey was conducted on 30/08/2019 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. Vide order dated 28/01/2020 passed under section 201(1)/201(1A) of the Act 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 ( AO-TDS ) not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 201(1)/201 (1A) of the Act. The relevant findings of the coordinate bench, in the aforesaid decision, are as under:- 3.5. Person responsible for payment We find that the ld. AR vide Ground Nos. 6 to 13 had argued on the preliminary jurisdiction point that UISPL is not the person responsible for payment as per section 194C read with section 204 of the Act. For the sake of convenience, the relevant extract of section 194C of the Act is reproduced hereinbelow:- Section 194C (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person... 3.5.1. Hence it could be evident that on a bare reading of the aforesaid section, the following three conditions are required to be fulfilled in entirety for the department to conclude that UISPL is required to withhold taxes under Section 194C of the Act on disbursements to Driver-Partners:- (1) UISPL should be the 'person responsible for paying' as per provisions of Section 204 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween a User and a Driver-Partner through the Uber App. Since the amount paid in cash is directly paid by user to the Driver-Partner and UISPL is not involved in the transaction at all, UISPL cannot be treated as a person responsible for paying when the amount is directly paid by the user to a Driver-Partner. When UISPL cannot be held as a person responsible for payment when cash is directly paid by the User to the Driver-Partner, then how the very same UISPL could be treated as a person responsible for payment when the User decides to make payments through digital means. We find that the role of UISPL is limited to act as a payment and collection service provider of Uber B.V. whereby the ride fare is collected by UISPL in its bank account on behalf of Uber B.V. and thereafter payments are made, on the instruction of Uber B.V., to Driver-Partners. 3.5.5. We find that the UISPL was brought in to the picture due to the restriction placed by the RBI vide Circular dated 22.8.2014 as detailed supra which prohibited Uber B.V. from collecting the ride fare on behalf of Driver-Partners through its bank account in the Netherlands, and was mandated to collect and disburse the rider fare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Delhi High Court in the case of CIT vs. Cargo Linkers reported in 179 Taxman 151 (Del.). c) Decision of Hon'ble Delhi High Court in the case of CIT vs. Hardarshan Singh reported in 216 Taxman 283 (Del.). d) Decision of Co-ordinate Bench of this Tribunal in the case of DCIT vs. Movies Stunt Artist reported in 6 SOT 204 (Mum.). e) Decision of Co-ordinate Bench of Indore Tribunal in the case of Chief medical Officer vs. ITO reported in 40 taxmann.com 156 3.5.8. We also find that the above views and propositions are also supported by the circulars issued by the Central Board of Direct Taxes clarifying that an intermediary is not required to deduct tax at source. Few circulars issued in this regard are as follows:- (a) Circular No. 487 dated 8.6.1987 wherein the Board had clarified that workers employed to manufacture bidi through a medium of agency such as Munshis who manufacture bidis and after bringing bidi to factory for quality check and get the payments from Munshis, are not required to deduct tax at source while making payment to such workers. (b) Similar clarification was issued vide Circular No. 715 dated 8 August 1995 (Question No 7) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 194C of the Act We find that the Driver-Partners enter into only one agreement i.e. with Uber B.V. for availing the lead generation service . The relevant clauses of the said agreement which are enclosed in pages 55 to 66 of the paper book filed before us are summarised as under: a) Clause 1.14 and 1.17 - Transportation service is provided by the Driver-Partner to the User and Uber B.V. merely provides lead generation services to the Driver-Partner. b) Clause 2.2.- The Driver-Partner provides transportation services to the User at his own expense and the Driver-Partner is responsible for the transaction between them and the User. c) Clause 2.3.- Transportation service provided by the Driver-Partner to a User creates a legal and direct business relationship between them and Uber B.V. is not responsible for any action, inaction or lack of proper services of the Driver-Partner. d) Clause 2.4. - Uber B.V. does not control the Driver-Partner in the performance of his service and the Driver-Partner has full right to accept or reject the request received on the Uber App. e) Clause 2.5. - Driver-Partner is responsible for all obligations and liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er B.V. may, if so required by the User, facilitate the payment to be made by the User to the Driver-Partner. It is open to the User by exercise of an option at will, not to avail of this facility provided by Uber B.V. and to pay the Driver-Partner directly for the transportation service availed by remitting cash payment to the Driver-Partner. d) Clause 5- Uber B.V. has no responsibility or liability related to transportation service provided by the Driver-Partner to the User. 3.6.2. From the aforesaid clauses in the relevant agreements, it could be safely concluded that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain 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. 3.8. Principle of Consistency in the assessment made by 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. 3.8.1. Further, 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. 3.8.2. Therefore, the Department has been consistently taking a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 204 of the Act and will be required to deduct tax at source. It is not the case of the revenue that the assessee company need to be taxed as an agent of non-resident in terms of section 163 of the Act. It is the case of the revenue that UISPL is making payment to Driver-Partners on behalf of Uber B.V. (non-resident entity). This amendment has been specifically brought into the statute only with effect from 1.4.2020 by the Finance Act 2020 and cannot be made applicable for earlier years. This amendment cannot be held to be clarificatory in nature thereby holding it retrospective in operation as admittedly the same was not introduced with the expression for the removal of doubts . If the version of the revenue is to be accepted by holding that UISPL would be person responsible for paying as it was making payment to Driver-Partners on behalf of Uber B.V. (Non-resident) and that the said provision was always there in the statute, then there would be absolutely no necessity for the parliament to even introduce this amendment by way of insertion of clause (v) in section 204 of the Act in the Finance Act 2020 with effect from 1.4.2020. In other words, if the contention of the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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