2010 (9) TMI 1263

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..... bt is actually the TDS that is deducted from interest income of appellant. According to assessing Officer, the moment TDS is deducted by the payer, the amount of TDS so deducted becomes property of the Government that cannot be held as bad debts and be allowed as bad debts. 3. In the appellate proceedings learned counsel of appellant has admitted that the amount was treated by appellant as TDS, He has argued that appellant came to know subsequently that this TDS was never deposited by the deductor party into Government Account and not paid to the assessee also. Therefore, appellant reversed the entries and treated the TDS so deducted as a debt due from the deductor party which has now been written off and claimed that the same should be .....

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..... ment. Therefore, writing off of those TDS amounts as bad debts is not at all justified. This ground of appeal is accordingly rejected. 5. Aggrieved the Assessee is on appeal. The fact is that the Assessee had offered the entire amount of interest receivable from the debtors, including the amount withheld by the debtor towards TDS, as income of the earlier years. Out of this amount the Assessee has not received the amount of ₹ 1,86,316/- withheld by the debtors. Thus this amount certainly represents a debt due from the debtor which has not been realised. No doubt if the debtor had deposited the amount into the Government on behalf of the Assessee, it would amount to payment of this amount to the Assessee, as corresponding credit f .....

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..... , it was specifically pointed out that invoking of Rule 8D may lead to enhancement. The CIT(A), following ITO V Daga Capital Management Pvt Ltd (117 ITD 169 Mum SB) and applying rule 8D, the CIT(A) determined the amount to be disallowed at ₹ 4,25,860/- as against ₹ 59,974/- disallowed by the AO. 7. Aggrieved the assessee is on appeal. We find that the decision of Special Bench in the case of Daga Capital Management Pvt Ltd has been set aside by the jurisdictional High Court in the case of Godrej Boyce Mfg Co Ltd v DCIT (2010 TIOL-564-HC-MUM-IT). In the circumstances, we set aside the order of AO and CIT(A) on this issue and remit the matter back to the files of AO to decide the issue afresh in line with the ratio of the de .....

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