Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that Uber India cannot be treated as assessee-in-default for no deduction of tax at source (TDS) on payments made to restaurant and courier partners or driver-partners under Uber Eats and Uber App respectively on behalf of Uber B.V. (company based in Netherlands) in earlier years than Assessment Years (AY) 2020-21.
With this the bench dismissed the appeal filed by the Income Tax Department. The appeal was filed after Commissioner of Income Tax – Appeal (CIT-A) set aside order of tax demand related with AY 2019-20 (Fiscal Year 2018-19). CIT (A) followed ruling given by ITAT for the same assessees in similar matter for AY 2016-17 and 2017-18 in taking decision for AY 20.
The key issue was whether amendment made in the section 204 of the Income Tax Act will be applicable in this case or not. The amendment makes it very clear that any person who is authorized to make payment on behalf of a non-resident will be covered within the purview of section 204 of the Act and will be required to deduct tax at source. However, it is important to mention that this amendment is effective only from April 1, 2020 which means applicable from Assessment Year 2020-21 onwards and not earlier
ITAT bench took note of ruling given by coordinate bench of the Tribunal on January 30, 2023 in same assessee case for AY 19. Highlighting from the said ruling, the bench said that it had 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 (Assessing Officer for TDS) also rendered similar findings in respect of payments made under the food delivery services,” the bench said.
Further, the bench observed that for transportation services, Assessee is 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, all through the Uber App. Likewise, for food delivery services, the Assessee through its Uber Eats app provides a platform that connects and acts as ‘three-sided marketplace’ i.e., a courier partner, a restaurant owner, and a customer with the Uber Eats platform at its center
The bench also observed that the money is collected for the food and its delivery from the customer, who makes the payment to the courier partner and the amount towards delivery of food is handed over to the restaurant partner. It opined that since the IT Dept could not show any reason to deviate from the ruling in Assessee’s own case and no change in law was alleged to have taken place in the relevant assessment year. Based on all these, ITAT did not find any infirmity in the order passed by CIT(A) and dismissed the appeal.