Effect to advance pricing agreement
[Section-169 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 169(1) of Income Tax Act 2025
169(1) If a return of income for any tax year covered by an advance pricing agreement has been furnished by any person, before the date of entering into the said agreement, he shall, irrespective of anything to the contrary contained in section 263, furnish a modified return, in accordance with and limited to the agreement, in respect of such tax years, within three months from the end of the month in which the agreement was entered into.
Section 169(2) of Income Tax Act 2025
169(2) Except as provided in this section, all other provisions of this Act shall apply accordingly as if the modified return is a return furnished under section 263.
Section 169(3) of Income Tax Act 2025
169(3) Where a modified return is furnished under sub-section (1), and assessment or reassessment proceedings, in respect of a tax year to which the agreement applies, were initiated before the filing of such return then,––
- (a) if such proceedings have been completed, the Assessing Officer shall pass an order modifying the total income of the relevant tax year; or
- (b) if such proceedings are pending on the date of filing of modified return, the Assessing Officer shall proceed to complete them,
as per the agreement after taking into consideration the modified return so furnished.
Section 169(4) of Income Tax Act 2025
169(4) Irrespective of anything contained in section 275 or 286 or 296,—
- (a) the order in respect of a case falling under sub-section (3)(a) shall be passed within one year from the end of the financial year in which the modified return under sub-section (1) is furnished;
- (b) in respect of a case falling under sub-section (3)(b), the period of limitation as provided in section 275 or 286 or section 296 for completion of pending assessment or reassessment proceedings shall be extended by twelve months.
Section 169(5) of Income Tax Act 2025
169(5) In this section,—
- (a) “agreement” means an agreement referred to in section 168(1);
- (b) the assessment or reassessment proceedings for a tax year shall be deemed to have been completed where—
- (i) an assessment or reassessment order has been passed; or
- (ii) no notice has been issued under section 270(8) till the expiry of the limitation period provided under the said section.
FAQs on Section 169 of Income Tax Act 2025
What is the requirement under Section 169(1) when a return is already filed for years covered by an Advance Pricing Agreement (APA)?
If a return of income has been filed for a tax year covered by an APA before the agreement date, the person must file a modified return, limited to the agreement, within three months from the end of the month in which the agreement was entered.
Does the modified return under Section 169(1) override other provisions like Section 263?
Yes, the obligation to file a modified return applies irrespective of anything to the contrary in Section 263.
How is the modified return treated under the Act?
Section 169(2) provides that all other provisions of this Act will apply as if the modified return is a return filed under Section 263.
What happens if assessment or reassessment proceedings are already completed before the modified return is filed?
Under Section 169(3)(a), the Assessing Officer shall pass an order modifying the total income of that year in accordance with the APA and the modified return.
What if assessment or reassessment proceedings are pending at the time of filing the modified return?
Section 169(3)(b) mandates that the Assessing Officer shall complete the proceedings as per the agreement, considering the modified return.
What is the time limit for passing the order where assessment was already completed?
As per Section 169(4)(a), the order must be passed within one year from the end of the financial year in which the modified return is furnished.
Is there any extension in time limit for completing pending assessment or reassessment?
Yes, Section 169(4)(b) provides that the period of limitation under Sections 275, 286, or 296 shall be extended by twelve months.
What is the meaning of “agreement” in this section?
As per Section 169(5)(a), “agreement” refers to the Advance Pricing Agreement mentioned in Section 168(1).
When is an assessment or reassessment considered completed for the purpose of this section?
Under Section 169(5)(b), it is deemed completed if:
(i) an assessment or reassessment order has been passed; or
(ii) no notice was issued under Section 270(8) till the limitation period under that section expired.
Can the modified return be used to reopen closed assessments?
No, Section 169 operates only within its defined scope. Only existing or pending proceedings are subject to modification or completion as per the APA and modified return.
What if the modified return is not filed within the time limit?
Failure to file the modified return within the prescribed three-month period could result in non-applicability of the APA to the already filed returns, leading to potential disputes or re-assessment under general provisions.
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