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2015 (4) TMI 710 - ITAT DELHIAccrual of income - reduction in taxable income - evasion of tax - Shown lesser amount in agreement - Unilateral Modification in Master License Agreement and the Franchise agreement - Held that:- All these agreements read with correspondence clearly show that assessee was entitled to USD 22,500 and not USD 45,000 during FY 2002- 03. Ld. Standing Counsel has submitted that there could not be any unilateral amendment to the Franchisee agreement. However, contents of letter dated 8-12-2002, reproduced above, clearly show that the amendment was effective after discussions with reference to license and location fees. A memorandum was accordingly entered into. There was no novation of contract and it was only a change in the payment of fee to assessee. At the outset we may clarify that we are deciding the issue to the extent of entitlement of Franchisee fee as per the Master License Agreement read with JV agreement and Franchisee agreement and the communication relied upon by assessee. We may clarify that we are not giving any finding on the issue relating to assessee's alternate claim on the ground that in any case, no income was assessable in the hands of assessee as the assessee was required to make the payment to McDonald Corporation because this has trapping on TP issues, particularly because there was no permission for remitting the amount prior to 3-2-2004 in respect of new restaurant opened as per letter dated 3-2-2004 of the Under Secretary, Ministry of Finance, available at page 217 of the PB. Ld. Standing Counsel has referred to covenant 26 of the Master License Agreement as well as Franchisee agreement to submit that the modification of the agreement could be only as agreed upon. In this regard we find that the term "duly executed" in case of Franchisee implies that the same is executed by an officer of Franchiser or its Franchiser director and in case of Franchisee executed by the Franchisee. The communication contained at page 68, in our opinion, confirmed to both the conditions because the same has been addressed to Franchisee by Franchiser. We, accordingly, do not find any reason to interfere with the order of ld. CIT(A) to the extent that since no real income accrued to assessee, no addition was called for. - Decided against the revenue.
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