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Ltd., and the entries were reversed.

(iv) Therefore the write off of the debts standing in the name of M/s.

Kal Comm Pvt. Ltd., in the books of the assessee company, is with respect to the dues receivable from cable operators towards pay channel revenue, which were earlier billed by M/s. Kal Comm Pvt. Ltd., on behalf of the assessee company.

(v) Thus, the outstanding dues from M/s. Kal Comm Pvt. Ltd., to the assessee company are only the amount of subscription receivable from the cable operators which were billed by M/s. Kal Comm Pvt. Ltd., on behalf of the assessee company. 4.3 However the Ld.AO disallowed the claim of bad debts amounting to Rs.33,27,52,827/- in the hands of the assessee and made additions by rejecting the arguments of the assessee because he was of the view that:-

(i) The loss on account of unrealizable subscription from various cable operators is to be treated as bad debt in hands of M/s.

Kal Comm Pvt. Ltd. because M/s. Kal Comm cable operators remits only the net collection to the assessee.

(ii) The loss had arisen due to the short collection of the subscription by M/s. Kal Comm Pvt. Ltd., and therefore it's a loss attributable to M/s. Kal Comm Pvt. Ltd., and not to the assessee.

"3. From the perusal of the facts which have not been disputed by the Revenue, it is clear that the assessee has remitted the entire gross amount received from the cable operators to M/s. Sun TV Network Ltd., The amount remitted by the assessee to M/s. Sun TV Network Ltd., includes the amount of TDS deducted by the cable operators at the time of payment made by them to the assessee. In lieu of the services rendered by the assessee, the assessee is entitled to receive fixed commission. Since tax has already been deducted and paid to the Government at the time of making collections, the assessee is entitled to get the credit of the same while receiving commission income. M/s. Sun TV Network Ltd., had engaged the services of the assessee for collection of the subscription amount against commission. However, the cable operators at the time of payment of subscription, deducted the tax at source and remitted the remaining amount to the assessee. The subscription collected by the assessee is not its income and hence is not taxable in the hands of the assessee. The assessee is only a nodal agency for collecting subscription on behalf of M/s. Sun TV Network Ltd. The amounts collected by the assessee are credited to the separate account 'Subscription Charges'. The said account is debited at the end of Financial Year when the amounts are paid to M/s. Sun TV Network Ltd. As the subscription collected by the assessee from various cable operators is not the income of the assessee, the same is not shown in Profit & Loss account. The subscription amount is the income of M/s. Sun TV Network Ltd. and as such is taxable in the hands of M/s. Sun TV Network Ltd. However, the cable operators are deducting tax at source on the payments of subscription made to assessee, whereas, the assessee is remitting the gross amount to M/s. Sun TV Network Ltd., the assessee is entitled to receive credit of the tax deducted at source u/s. 199 of the Act subject to production of TDS Certificates received from respective deductors. The levy of tax on the commission received would amount to double taxation".

In the books of M/s. Kal Comm Pvt. Ltd.

1. At the time of rising of Invoices on behalf of the assessee.

Individual cable TV operator account (debit) ________ *To assessee company account (credit) __________

2. At the time of collection of Invoice amount from cable TV operator Bank/cash account (debit) _________ To Individual cable TV operator account (credit) _____

3. At the time of remittance to assessee company *Assessee Company account (debit) _____________ To bank account (credit) _________________