s.170A — Modified return after business reorganisation

Currently operative

Income-tax Act, 1961

s.170A

Income-tax Act, 2025

s.314

In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.

In short

Section 170A of the Income-tax Act, 1961 requires the successor in a business reorganisation to furnish a modified return within six months from the end of the month in which the order of the High Court, tribunal or Adjudicating Authority was issued, in accordance with and limited to that order. Rule 12AD prescribes Form ITR-A, to be furnished electronically under digital signature. The section exists in two versions: as inserted by the Finance Act 2022 with effect from 1 April 2022 it was a single provision with an Explanation, requiring the pre-order return to have been furnished by the successor and containing no machinery for the Assessing Officer; it was substituted in its entirety by the Finance Act 2023 with effect from 1 April 2023. Under the current sub-section (2), where the assessment or reassessment stood completed on the date of furnishing the modified return the Assessing Officer may only pass an order modifying the total income already determined, and where it was pending he passes an order assessing or reassessing that income, in each case in accordance with the reorganisation order and taking the modified return into account. Sub-section (3) preserves the rest of the Act and fixes tax at the rate applicable to the relevant assessment year. The Explanation confines business reorganisation to amalgamation, demerger or merger, and confines successor to all resulting companies. Section 314 of the Income-tax Act, 2025 carries the provision over in substance unchanged.

What the provision does

Gives the successor a statutory vehicle to bring a sanctioned scheme onto the record for a year already returned, and obliges the Assessing Officer to give effect to it. It does not validate an assessment framed on a company that has ceased to exist, does not reach a reorganisation order issued before 1 April 2022, does not extend to a slump sale, an asset transfer or a conversion, and does not permit the return to carry anything beyond the consequences of the order.

Threshold questions

Was the order issued on or after 1 April 2022, and on or after 1 April 2023
Had a return already been furnished for the year to which the order applies
Is the reorganisation an amalgamation, demerger or merger, and is the successor a company
Was the modified return furnished within six months of the end of the month of issue
Was the assessment for that year complete or pending on the date of furnishing

The recurring disputes.

Whether the six-month window can be relaxed

Section 170A contains no proviso and no condonation power, and no reported decision deals with a modified return filed late. Dalmia Power Ltd v. ACIT holds that section 119(2)(b) is not the route in scheme cases, which cuts both ways. The Board has twice relaxed the period by order under section 119, by its orders of 26 September 2022 and 13 March 2024, which suggests it does not treat the period as absolute.

Whether the Assessing Officer may scrutinise the year again

The Bombay High Court has held three times that he may not. In Technoforce Solutions (1 April 2026) notices under sections 143(2) and 142(1) were quashed and the assessment set aside because clause (a) permits only a modifying order. In Bajaj Electricals (9 February 2026) notices issued to scrutinise the modified return again were held contrary to clause (b). In Thomson Reuters (8 September 2026) the Court held that filing the modified return does not alter the character of a pending assessment, quashing a section 143(2) notice and a section 92CA(2) reference.

Limitation for the giving-effect order

Section 153 contains no reference to section 170A or to a modified return, and the section prescribes no period for the order under sub-section (2)(a). Either the order falls within section 153(6)(i) as one giving effect to an order of a court, which requires an NCLT order to be an order of any court, or no period runs at all. Neither reading has been tested.

Orders issued before 1 April 2022

Section 170A does not apply. The Telangana High Court so held in TSI Business Parks (11 April 2023) and ITAT Pune in Kumar Urban Development (18 August 2025). The remedy is the direction in Dalmia Power that the Department receive the revised return and give effect to the scheme. The Board's administrative window for such orders closed on 30 June 2024.

Frequently asked.

What is the time limit for a modified return under section 170A?

Six months from the end of the month in which the order in respect of the business reorganisation was issued. An order issued on 5 July 2024 gives 31 January 2025. The statute says issued, not pronounced, received or filed with the Registrar of Companies, so the period runs from the month the order bears even where the certified copy arrives later. There is no power to condone delay in the section.

Can a firm or LLP file a modified return under section 170A?

On the text, apparently not, and there is no authority either way. The Explanation defines successor to mean all resulting companies in a business reorganisation, whether or not the company was in existence prior to it. A successor that is a firm, an LLP or an individual is not a resulting company. Section 170(2A), by contrast, is keyed to succession generally and is therefore wider, a mismatch between two provisions inserted by the same Finance Act.