TDS on rent on net or gross amount

Chintanshah (CA Practice ) (122 Points)

10 May 2007  
XYZ Co. is paying a rent for its office premises to ABC Ltd.Rs. 4,00,000

ABC Ltd had taken deposit from XYZ Co. and interest paid amounting to Rs. 2,00,000

AT the month end ABC Ltd. raise a note for an amount of Rs. 4,00,000 towards rent of the premises and in the same note it also shown an interest amount Rs. 2,00,000 of deposit and raise a net amount of Rs. 2,00,000

Now, XYZ Co paid an amount Rs. 2,00,000 after deducting TDS on rent on amount of Rs.2,00,000

now a question is
is XYZ Co has to deduct TDS on Rs. 4,00,000 or Rs. 2,00,000 ?

on which amount XYZ Co. has to book expense account i.e. Rs. 2,00,000 directly debited or Rs.4,00,000 debit towards rent and Rs. 2,00,000 credit towards interest ?

give reply after reading question properly.