The High Court dismissed the Revenue's appeal against the ITAT order regarding franchise fee income for AY 2003-04. Relying on factual findings, the court held that the assessee received USD 22,500 and could not remit the amount due to a government embargo, thus allowing no addition.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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*** IN THE HIGH COURT OF DELHI AT NEW DELHI**
THE PR. COMMISSIONER OF INCOME TAX-06 .... Appellant
versus
MC DONALD’S INDIA (P) LTD. ..... Respondent
Advocates who appeared in this case:
For the Appellant : Mr Rahul Chaudhary with Mr Ruchir Bhatia, Advocates.
For the Respondent : Mr Pawan Kumar, Advocate. CORAM:-
HON’BLE MR JUSTICE BADAR DURREZ AHMED HON’BLE MR JUSTICE SANJEEV SACHDEVA
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
Page 1 of 3
ITA No.818/2015
income by showing an expenditure of USD 45,000 as against its income USD 22,500 in respect of each franchisee.
“7.2 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 8-122002, reproduced above, clearly show that the amendment was effective after discussions with reference to licence 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.
7.3 Ld. Standing Counsel has referred to covenant 26 of the Master License Agreement as well as Franchisee agreement to submit that the modification
Page 2 of 3
ITA No.818/2015
of the Franchisee agreement could be only as agreed upon. In this regard we find that the term “duly executed” in case of 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. Ground is dismissed.”
BADAR DURREZ AHMED, J
SANJEEV SACHDEVA, J
NOVEMBER 05, 2015/st
Page 3 of 3
ITA No.818/2015
3 issues framed by the court
Whether the High Court can interfere with the Tribunal's finding of fact that the assessee received only USD 22,500 franchise fee and not remitted the alleged USD 45,000 to the parent company.
Whether the appeal raises any question of law or substantial question of law.
Whether the Tribunal's finding that no real income accrued to the assessee calls for any addition is liable to be interfered with.
The PR. Commissioner of Income Tax-06
Mc Donald's India (P) Ltd.
Badar Durrez Ahmed
Sanjeev Sachdeva
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
