2011 (1) TMI 1407

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....g officer, is directed against CIT(A)'s order dated 20th November, 2009, in the matter of assessment under section 143(3) of the Income tax Act, 1961, for the assessment year 2005-06. 2. Grievances raised by the Assessing Officer are as follows: "1.Whether on the facts and in the circumstances of the case, the CIT (A) was justified in allowing the disallowance of TDS receivable of Rs. ....

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....as claimed deduction of Rs. .11,15,137 in respect of bad debts written. On an analysis of the nature of amounts included in the deduction, the Assessing Officer noted that while Rs. .2,66,545 pertains to clients who are not satisfied with the services, Rs. .8,48,592 represent TDS receivable which were written off. When the assessee was required to show cause as to why TDS write off amounting to Rs....

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....ing Officer. He was of the view that since TDS amount does not represent a debt in the first place, it cannot at all be considered for deduction as bad debt u/s.36(1)(vii). He also relied upon Hon'ble Supreme Court's judgement in the case of national Alunimum Co. Ltd v. CIT, (79 ITR 514) in support of the proposition that tax deductible at source cannot be considered as a bad debt. It was in this ....

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....under section 201 r.w.s. 195 that the assessee had to pay because it failed to discharge the tax deduction obligations imposed on the assessee. Their Lordships were of the considered view that the payment made by the assessee on account of his not discharging the tax deduction obligations, and, therefore, the same could not be allowed as deduction on business income. As against the position that H....