Syco boss Simon Cowell tells the 19-year-old on tonight's show: "We have a bit of a problem, and I think you know what that problem is, don't you? You're on another show which you're signed up to.
"You signed a contract with another company so why did you come and audition for this show?
"All you're doing is taking the place of somebody else, who isn't in your position on two shows. I'll be absolutely blunt with you, we were going to give you a yes, but I can't... you understand that."
Criticising The Voice, which he left after one week, O'Shaughnessy argued: "Song writing is my thing and I wasn't allowed to express my own music on the other show, but I was on this show, it was a better opportunity for me."
Stating his intention to return to the show, he added: "Right now I know exactly what I want to do, I need to get home, get that organised so I can get out of that show and come back over here and do BGT because that's what I want to do."
However, he "100%" understood why Cowell made the decision to withdraw him from the competition.
If O'Shaughnessy manages to relinquish his contract with Universal, there remains a chance for him to appear in next week's live shows.
Britain's Got Talent airs Saturday at 8.45pm on ITV1 for the show's final audition and unveiling of next week's semi-finalists.
Watch Ryan O'Shaughnessy perform 'No Name' on Britain's Got Talent below: