TDS on payments by Ola to drivers: Whether Sub Contract liable for TDS U/s 194C or mere agent principal deal not liable for TDS?




Loading

TDS on payments by Ola to drivers: Whether Sub Contract liable for TDS U/s 194C or mere agent principal deal not liable for TDS?

Here was an interesting case before ITAT Chandigarh as under:

M/s ANI Technologies Private Limited (ITA No. 163-Chd-2020).

The issue involved was applicability of TDS on payments by Ola to drivers,  Whether it is Sub Contract liable for TDS U/s 194C or mere agent principal deal not liable for TDS?

Let us have a short overview of the case:

Facts:

  1. The assessee company submitted that essentially, it partakes the character of an “aggregator” or an online market place for a Rider to communicate with the TSPs/ Drivers for the purpose of transportation. It also maintained that it is primarily a technology company to connect with a driver for the purpose of transportation. It also reiterated that electronic payments are routed through the assessee to make the transaction between the driver and rider hassle free.
  1. AO on the other hand held that, the assessee provides the business of transport service to riders by sub- contracting with the TSPs/ Drivers and hence the Ride Charges disbursed by the assessee to TSPs/ Drivers are exigible to tax deduction at source U/S 194C (TDS on payment to contractors).
  1. As per the Subscription Agreement, by virtue of which the TSPs can list on the OLA Partner App, contract for availing the Service shall only be between the TSPs/Drivers and the Customers and the assessee shall have no obligation in respect of such Contract.

ITAT Chandigarh held as below:

  1. The entire basis of the AO to come to the conclusion that payments have been made in pursuance of a Contract between the TSPs/Drivers and the assessee is unsupported by any material on record and is only surmises and conjunctures or his erroneous understanding of the contractual relationship.
  1. The assessee acts as a mere intermediary. The driver is solely liable for any accident/incident involving the vehicle while providing taxi services.
  1. The appeal is allowed and the assessee need not deduct and pay TDS U/S 194C.




Menu