diff --git a/modules/apps/29-fee/ibc_module.go b/modules/apps/29-fee/ibc_module.go
index 7bc1b326b04..e8a4a45fd40 100644
--- a/modules/apps/29-fee/ibc_module.go
+++ b/modules/apps/29-fee/ibc_module.go
@@ -203,7 +203,7 @@ func (im IBCModule) OnRecvPacket(
 	}
 
 	// if forwardRelayer is not found we refund recv_fee
-	forwardRelayer, _ := im.keeper.GetCounterpartyAddress(ctx, relayer.String(), packet.GetSourceChannel())
+	forwardRelayer, _ := im.keeper.GetCounterpartyAddress(ctx, relayer.String(), packet.GetDestChannel())
 
 	return types.NewIncentivizedAcknowledgement(forwardRelayer, ack.Acknowledgement(), ack.Success())
 }
diff --git a/modules/apps/29-fee/ibc_module_test.go b/modules/apps/29-fee/ibc_module_test.go
index 293ae29c08f..462d7702c7d 100644
--- a/modules/apps/29-fee/ibc_module_test.go
+++ b/modules/apps/29-fee/ibc_module_test.go
@@ -514,7 +514,7 @@ func (suite *FeeTestSuite) TestOnRecvPacket() {
 			cbs, ok := suite.chainB.App.GetIBCKeeper().Router.GetRoute(module)
 			suite.Require().True(ok)
 
-			suite.chainB.GetSimApp().IBCFeeKeeper.SetCounterpartyAddress(suite.chainB.GetContext(), suite.chainA.SenderAccount.GetAddress().String(), suite.chainB.SenderAccount.GetAddress().String(), suite.path.EndpointA.ChannelID)
+			suite.chainB.GetSimApp().IBCFeeKeeper.SetCounterpartyAddress(suite.chainB.GetContext(), suite.chainA.SenderAccount.GetAddress().String(), suite.chainB.SenderAccount.GetAddress().String(), suite.path.EndpointB.ChannelID)
 
 			// malleate test case
 			tc.malleate()
@@ -522,6 +522,16 @@ func (suite *FeeTestSuite) TestOnRecvPacket() {
 			result := cbs.OnRecvPacket(suite.chainB.GetContext(), packet, suite.chainA.SenderAccount.GetAddress())
 
 			switch {
+			case tc.name == "success":
+				forwardAddr, _ := suite.chainB.GetSimApp().IBCFeeKeeper.GetCounterpartyAddress(suite.chainB.GetContext(), suite.chainA.SenderAccount.GetAddress().String(), suite.path.EndpointB.ChannelID)
+
+				expectedAck := types.IncentivizedAcknowledgement{
+					Result:                ibcmock.MockAcknowledgement.Acknowledgement(),
+					ForwardRelayerAddress: forwardAddr,
+					UnderlyingAppSuccess:  true,
+				}
+				suite.Require().Equal(expectedAck, result)
+
 			case !tc.feeEnabled:
 				suite.Require().Equal(ibcmock.MockAcknowledgement, result)
 
@@ -534,11 +544,9 @@ func (suite *FeeTestSuite) TestOnRecvPacket() {
 				suite.Require().Equal(relayer, suite.chainA.SenderAccount.GetAddress().String())
 
 			case !tc.forwardRelayer:
-				forwardAddr, _ := suite.chainB.GetSimApp().IBCFeeKeeper.GetCounterpartyAddress(suite.chainB.GetContext(), suite.chainA.SenderAccount.GetAddress().String(), suite.path.EndpointA.ChannelID)
-
 				expectedAck := types.IncentivizedAcknowledgement{
 					Result:                ibcmock.MockAcknowledgement.Acknowledgement(),
-					ForwardRelayerAddress: forwardAddr,
+					ForwardRelayerAddress: "",
 					UnderlyingAppSuccess:  true,
 				}
 				suite.Require().Equal(expectedAck, result)
diff --git a/modules/apps/29-fee/keeper/msg_server_test.go b/modules/apps/29-fee/keeper/msg_server_test.go
index c6dc2f90856..c7551ce0154 100644
--- a/modules/apps/29-fee/keeper/msg_server_test.go
+++ b/modules/apps/29-fee/keeper/msg_server_test.go
@@ -23,7 +23,7 @@ func (suite *KeeperTestSuite) TestRegisterCounterpartyAddress() {
 			func() {},
 		},
 		{
-			"success",
+			"counterparty is arbitrary string",
 			true,
 			func() { counterparty = "arbitrary-string" },
 		},
diff --git a/modules/apps/29-fee/keeper/relay.go b/modules/apps/29-fee/keeper/relay.go
index 05511581d54..e2d75c3a1f8 100644
--- a/modules/apps/29-fee/keeper/relay.go
+++ b/modules/apps/29-fee/keeper/relay.go
@@ -33,7 +33,7 @@ func (k Keeper) WriteAcknowledgement(ctx sdk.Context, chanCap *capabilitytypes.C
 
 	// it is possible that a relayer has not registered a counterparty address.
 	// if there is no registered counterparty address then write acknowledgement with empty relayer address and refund recv_fee.
-	forwardRelayer, _ := k.GetCounterpartyAddress(ctx, relayer, packet.GetSourceChannel())
+	forwardRelayer, _ := k.GetCounterpartyAddress(ctx, relayer, packet.GetDestChannel())
 
 	ack := types.NewIncentivizedAcknowledgement(forwardRelayer, acknowledgement.Acknowledgement(), acknowledgement.Success())
 
diff --git a/modules/apps/29-fee/keeper/relay_test.go b/modules/apps/29-fee/keeper/relay_test.go
index 3d639473c48..9ddd7e9b828 100644
--- a/modules/apps/29-fee/keeper/relay_test.go
+++ b/modules/apps/29-fee/keeper/relay_test.go
@@ -16,7 +16,7 @@ func (suite *KeeperTestSuite) TestWriteAcknowledgementAsync() {
 			"success",
 			func() {
 				suite.chainB.GetSimApp().IBCFeeKeeper.SetRelayerAddressForAsyncAck(suite.chainB.GetContext(), channeltypes.NewPacketId(suite.path.EndpointB.ChannelID, suite.path.EndpointB.ChannelConfig.PortID, 1), suite.chainA.SenderAccount.GetAddress().String())
-				suite.chainB.GetSimApp().IBCFeeKeeper.SetCounterpartyAddress(suite.chainB.GetContext(), suite.chainA.SenderAccount.GetAddress().String(), suite.chainB.SenderAccount.GetAddress().String(), suite.path.EndpointA.ChannelID)
+				suite.chainB.GetSimApp().IBCFeeKeeper.SetCounterpartyAddress(suite.chainB.GetContext(), suite.chainA.SenderAccount.GetAddress().String(), suite.chainB.SenderAccount.GetAddress().String(), suite.path.EndpointB.ChannelID)
 			},
 			true,
 		},