Section 169 — Modified Return on APA | ITA 2025

Section 169 — - MODIFIED RETURN OF INCOME

Section 169 is the substantive equivalent of 1961 s. 92CD -- the procedural mechanism for assessees to FILE MODIFIED RETURN incorporating ALP / methodology agreed in APA (s. 168). When APA is signed (typically 24-36 months after application, sometimes years after the relevant tax year), the assessee may need to re-file returns for covered periods to align with APA-determined pricing. Section 169 provides the statutory route -- modified return within 3 months of signing APA, ovverriding the normal s. 263 due-date / s. 271 belated-filing restrictions. AO bound to assess based on modified return. The provision is essential for ROLLBACK APA implementation -- prior 4 years can be re-opened to align with APA.

Statutory text — Income-tax Act, 2025

Marginal note -- Modified return of income

23[(1) Irrespective of anything to the contrary contained in section 263, where an income is modified as a result of advance pricing agreement entered into with any person then, such person shall, or any other person being an associated enterprise may,—

(a) furnish a return or a modified return in accordance with and limited to the agreement; and

(b) the time period for furnishing such return or modified return shall be three months from the end of the month in which the agreement was entered into, where the tax years relevant for such return or modified return shall be the years cov- ered by such agreement.]

(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.

(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,—

23. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, sub-section

(1) read as under : “(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.”

(a) if such proceedings have been completed before the filing of such return, 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.

(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 limita- tion as provided in section 275 or 286 or section 296 for completion of pending assessment or reassessment proceedings shall be extended by twelve months.

(5) For the purposes of 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. Secondary adjustment in certain cases.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 169	INCOME-TAX ACT, 1961 -- s. 92CD
s. 169(1) -- modified return on APA effective	1961 s. 92CD(1)
s. 169(2) -- 3-month window from APA-signing	1961 s. 92CD(2)
s. 169(3)-(5) -- assessment / re-assessment / time-limits	1961 s. 92CD(3)-(5)

STATUTORY ARCHITECTURE

MECHANISM: (i) APA signed (s. 168). (ii) ASSESSEE may file MODIFIED RETURN (Form ITR amended) within 3 MONTHS from APA-signing date. (iii) Modified return supersedes earlier original / revised returns for covered period. (iv) AO assesses based on modified return; if assessment already completed and APA ALP differs, AO re-opens / re-assesses per s. 169 specific authority. (v) Rollback application: same mechanism for prior 4 years; reduces TP-litigation exposure. RECOMPUTATION SCENARIOS: (a) Original return: assessee priced at INR 100; APA determines INR 110; modified return reports INR 110 income increment; tax on incremental INR 10 paid with interest. (b) Loss-year coverage: APA could increase income or reduce loss; either way modified return flows through. (c) Cross-period adjustments: APA covers Y3-Y8 and rollback Y(-4)-Y2; modified returns for Y(-4)-Y2.

PLANNING NOTES

(i) 3-MONTH WINDOW STRICT -- diary APA-signing date; modified return Form filing within 3 months; missed deadline forfeits APA-implementation route. (ii) ROLLBACK INTEGRATION -- coordinate prior-year modifications; reconcile with closed assessments. (iii) INTEREST EXPOSURE -- s. 234B / 234C interest may apply on incremental tax from APA-uplift; build into APA cost-benefit analysis. (iv) APPEALS COORDINATION -- if assessment for covered period under appeal at ITAT / HC, withdraw appeal in light of APA implementation.

CROSS-REFERENCES

Section 168 -- APA.
Section 263(1) -- Return-filing due date (overridden by s. 169).
Section 263 / 264 / 270 -- assessment / re-assessment provisions.
Section 234A / 234B / 234C -- interest on tax.

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