TDS on cab-hailing ride fares under section 194C does not apply where the platform only facilitates payments and bookings.

A cab-hailing aggregator was found not liable to deduct tax at source under section 194C on ride fare payments routed to drivers because the transport contract was between the rider and the driver, not the platform. The platform only facilitated bookings, charged a separate convenience fee, and acted as an intermediary for electronic payment routing; cash payments made directly to drivers were also outside section 194C. The contractual terms described a principal-to-principal arrangement and disclaimed agency, while the platform's control was limited to regulatory compliance. Section 194-O did not change the position for the year under appeal, so the assessee was not treated as an assessee-in-default under section 201.

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Issues: Whether the assessee, operating a cab-hailing platform as an aggregator, was liable to deduct tax at source under section 194C of the Income-tax Act, 1961 on ride charges routed to drivers and consequently be treated as an assessee-in-default under section 201 of the Income-tax Act, 1961.

Analysis: The platform merely connected riders and drivers and charged a separate convenience fee for facilitation services. The transportation contract was found to be between the rider and the driver, who held the necessary permits and provided the service on their own account. The ride fare belonged to the driver, while the assessee only routed electronic payments as an intermediary; cash payments directly to drivers were not treated as attracting section 194C. The contractual terms described the relationship as principal-to-principal, disclaimed agency, and showed that control exercised by the platform was only for compliance with regulatory requirements applicable to aggregators. The Tribunal also noted that pricing was regulated by transport authorities and that the introduction of section 194-O did not alter the conclusion for the year under appeal.

Conclusion: Section 194C was held to be inapplicable to the ride fare payments routed through the assessee, and the assessee could not be treated as an assessee-in-default under section 201.

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