Section 169 — Effect to advance pricing agreement. Successor to s.92CD of the 1961 Act.
Section 169 is in Chapter X — Special Provisions Relating to Avoidance of Tax, which runs from section 161 to section 177.
Sub-section (1), as substituted by Act No. 4 of 2026 with effect from 1 April 2026, overrides section 263. Where an income is modified as a result of an advance pricing agreement entered into with any person, that person shall, and any other person being an associated enterprise may, furnish a return or a modified return in accordance with and limited to the agreement. Under clause (b) the time for furnishing it is three months from the end of the month in which the agreement was entered into, and the tax years relevant for the return or modified return are the years covered by the agreement.
Sub-section (2) treats the modified return as a return furnished under section 263 for every other purpose of the Act. Sub-section (3) deals with proceedings already on foot for a tax year to which the agreement applies: under clause (a), where assessment or reassessment proceedings were completed before the modified return was filed, the Assessing Officer shall pass an order modifying the total income of that year; under clause (b), where they are pending on the date of filing, he shall proceed to complete them — in each case as per the agreement and after taking the modified return into consideration.
Sub-section (4) overrides sections 275, 286 and 296 on limitation. For a clause (3)(a) case, the order must be passed within one year from the end of the financial year in which the modified return is furnished. For a clause (3)(b) case, the period of limitation under section 275, 286 or 296 for completing the pending proceeding is extended by twelve months.
Sub-section (5) defines "agreement" as an agreement referred to in section 168(1), and deems assessment or reassessment proceedings for a tax year to have been completed where an assessment or reassessment order has been passed, or where no notice has been issued under section 270(8) until the expiry of the limitation period under that section.
An advance pricing agreement settles transfer prices for years whose returns have often already been filed and sometimes already assessed, so the agreed figures have to be got into the assessment record without reopening the case in the ordinary way. The section supplies that route: a return or modified return limited to the agreement, a short filing window tied to the date of the agreement, and a specific limitation regime so the Assessing Officer has time to give effect to it. The 2026 substitution widened the entry point — it is no longer limited to a person who had already filed a return before the agreement, and it lets an associated enterprise come in voluntarily.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to furnish the return or modified return | Three months from the end of the month in which the agreement was entered into | For the tax years covered by the advance pricing agreement | Sub-section (1)(b) |
| Time to pass the order where proceedings were already completed | One year from the end of the financial year in which the modified return is furnished | A case falling under sub-section (3)(a); overrides sections 275, 286 and 296 | Sub-section (4)(a) |
| Extension of limitation where proceedings are pending | Twelve months | A case falling under sub-section (3)(b); added to the period under section 275, 286 or 296 | Sub-section (4)(b) |
The obligations differ by person: the words are "such person shall, or any other person being an associated enterprise may", so the covered person must file and the associated enterprise has an option. The filing window runs from the month the agreement was entered into, not from any assessment event, and it applies to every year the agreement covers at once. What may be filed is limited by its own terms — "in accordance with and limited to the agreement" — so the modified return is not an opportunity to revise anything else in the year. The two limbs of sub-section (3) lead to different limitation outcomes: a completed year gets a fresh one-year clock from the end of the financial year of filing, while a pending proceeding simply gains twelve months on its existing clock. Sub-section (5)(b) settles which limb applies, and it treats a year as completed not only where an order was passed but also where the section 270(8) notice period has run out without a notice.
A company enters into an advance pricing agreement on 18 May 2027 covering four tax years. It must furnish a return or modified return in accordance with and limited to the agreement for all four years by 31 August 2027, three months from the end of May. For a year already assessed before that filing, the Assessing Officer must pass an order modifying total income by 31 March 2029 — one year from the end of the financial year in which the modified return was furnished. For a year whose reassessment was still pending, the existing limitation for that proceeding simply runs twelve months longer.
After an advance pricing agreement is signed, in the modified return filed for the covered years and in the order the Assessing Officer passes to give effect to it. An associated enterprise meets the section as a choice — whether to file its own modified return within the same three-month window.
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
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
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
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
