Uber India System not liable for Income Tax Act payments: Tribunal ruling

The Tribunal held that Uber India System Pvt. Ltd. (UISPL) is not the "Person responsible for paying" under section 204 of the Income Tax Act. UISPL was deemed to act as a payment and collection service provider for Uber B.V. and not the principal payer. The Tribunal also ruled that UISPL does not meet the criteria under section 194C and section 204 to be considered the person responsible for paying. Additionally, the amendment to section 204(v) cannot be applied retrospectively, and UISPL's non-payment of equalization levy does not make it liable as an "assessee in default" under the Act. The Revenue's appeal was dismissed.

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Issues Involved:
1. Determination of whether Uber India System Pvt. Ltd. (UISPL) is the "Person responsible for paying" under section 204 of the Income Tax Act.
2. Applicability of section 194C of the Income Tax Act on payments made to driver-partners, restaurant partners, and courier partners.
3. Retrospective application of the amendment to section 204(v) of the Income Tax Act.
4. Implications of non-payment of equalization levy under section 165A of the Finance Act 2016 by Uber B.V./Uber Portier B.V.

Summary of Judgment:

1. Determination of UISPL as "Person responsible for paying" under section 204 of the Income Tax Act:
The Revenue contended that UISPL, which makes payments to driver-partners, restaurant partners, and courier partners, should be considered the "Person responsible for paying" as per section 204 of the Act. However, the Tribunal found that UISPL is merely a payment and collection service provider acting on behalf of Uber B.V., and not the principal payer. The Tribunal upheld the decision that UISPL does not satisfy the conditions under section 194C and section 204 to be considered as the person responsible for paying.

2. Applicability of section 194C of the Income Tax Act:
The Tribunal noted that UISPL does not fulfill the three conditions necessary under section 194C: it is not the person responsible for paying, the payments are not for carrying out any work for UISPL, and there is no contract between UISPL and the driver-partners. The Tribunal reiterated that UISPL acts as a remitter of money collected on behalf of Uber B.V. and is not liable to deduct TDS under section 194C.

3. Retrospective application of the amendment to section 204(v) of the Income Tax Act:
The Tribunal observed that the amendment to section 204(v), which includes agents of non-residents as persons responsible for paying, is effective from 1.4.2020 and cannot be applied retrospectively. The Tribunal emphasized that the amendment was not introduced with the expression "for the removal of doubts," and thus, it cannot be deemed clarificatory or retrospective.

4. Implications of non-payment of equalization levy under section 165A of the Finance Act 2016:
The Revenue argued that the non-payment of equalization levy implied that UISPL was involved in the business operations of Uber B.V./Uber Portier B.V. However, the Tribunal did not find this argument sufficient to classify UISPL as the person responsible for paying under section 204.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming that UISPL cannot be treated as an "assessee in default" under section 201(1)/201(1A) of the Act. The Tribunal upheld the decision of the learned CIT(A) and found no reason to deviate from the previous rulings in similar cases involving UISPL. The appeal by the Revenue was dismissed, and the judgment was pronounced in open court on 26/04/2023.

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