Tangerine Design Private Limited Vs CPC-ITR (Delhi High Court)
The tax appellate authority dismissed the appeal of Tangerine Design Private Limited (AY 2018-19) on the disallowance of late employee EPF/ESI contributions.
Summary
In a significant decision concerning the interpretation of tax deductions for employee welfare contributions, an appellate authority dismissed the appeal of Tangerine Design Private Limited for the Assessment Year (AY) 2018-19. The central issue before the authority was the disallowance of Rs 54,77,440, which represented the employee’s contribution to the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) that the company had deposited with a delay.
The disallowance was initially made under Section 143(1) of the Income Tax Act, 1961, during the automated processing of the company’s tax return. The company subsequently challenged this addition, first via a rectification request and then through an appeal to the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), which was also dismissed.
Assessee’s Claim and Prior Favourable View
Tangerine Design Private Limited contested the addition, arguing that the payments were only delayed by one or two days. In its submission before the lower appellate authority, the assessee contended that some delays were due to “technical glitches” and that in earlier years, similar additions had been deleted based on judicial precedents.
