As per income tax provisions, remitters of money (being the person responsible for paying), need to deduct tax at source if payment is covered by TDS provisions. The assessing officer was of the view that Uber India is assessee-in-default for non deduction of TDS for payment made by it to drivers, restaurant & Courier partners.
The brief facts of the case are that Uber India is running the business of Uber BV (an entity incorporated in the Netherlands and is the legal owner of the software application called Uber App). Uber India activities related to drivers, business development, taking care of legal and statutory responsibilities and so on. Uber India is also involved in the task of collecting money from the passengers for the ride, collecting the commission, and making payment to the drivers for the ride. It is also involved in food delivery services.
In 2021, question before Mumbai ITAT was whether the assessing officer(AO) is correct in considering Uber India as assessee-in-default for non-deduction of TDS for disbursements made to driver partner. AO was of the view that agreement may have been signed between the driver, who is a contractor, and the specified person, which is a foreign enterprise Uber BV, but as far as the liability to deduct TDS, the same lies on Uber India, who is making the payment.
As per amendment to Sec.204(v) inserted by Finance Act 2020, the person authorised to make payment on behalf of a non-resident is liable for withholding tax. As the present case was pertaining to AY 16-17 & 17-18, Hon’ble Mumbai ITAT held that Uber India is not assessee-in-default for non deduction of TDS as the amendment is not clarificatory and thus, prospective in nature.
Following the above order of 2021 on TDS applicability on payment to driver; recently Mumbai ITAT held that uber India is not assessee-in-default for payment to restaurant and courier partner.