Rule 117 of the Draft Income-tax Rules, 2026 prescribes the procedure for giving effect to the rollback provisions of an agreement. The applicant must furnish a modified return of income under section 169 for each rollback year covered by the agreement, along with proof of payment of any additional tax arising due to the rollback provision. The modified return for the rollback year must be filed together with the modified return for the first tax year for which the agreement was sought. Where an appeal filed by the applicant is pending before the Commissioner (Appeals), Appellate Tribunal, or High Court on issues covered by the rollback provision, such appeal must be withdrawn to the extent of the covered subject before filing the modified return. Similarly, if an appeal filed by the Assessing Officer or Commissioner is pending before the Appellate Tribunal or High Court on the same issue, it must be withdrawn within three months of filing the modified return. All relevant authorities must be informed of the agreement containing the rollback provision. If the rollback effect cannot be implemented due to failure by the applicant, the agreement shall be cancelled.
Extract of Rule No. 117 of Draft Income-tax Rules, 2026
Rule 117
Procedure for giving effect to rollback provision of an Agreement.
(1) The effect to the rollback provisions of an agreement shall be given in accordance with this rule.
(2) The applicant shall furnish modified return of income referred to in section 169 of the Act in respect of a rollback year to which the agreement applies along with the proof of payment of any ad0ditional tax arising as a consequence of and computed in accordance with the rollback provision.
(3) The modified return referred to in sub-rule (2) shall be furnished along with the modified return to be furnished in respect of first of the tax years for which the agreement has been requested for in the application.
(4) If any appeal filed by the applicant is pending before the Commissioner (Appeals), Appellate Tribunal or the High Court for a rollback year, on the issue which is the subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the applicant before furnishing the modified return for the said year.
(5) If any appeal filed by the Assessing Officer or the Commissioner is pending before the Appellate Tribunal or the High Court for a rollback year, on the issue which is subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the Assessing Officer or the Commissioner, as the case may be, within three months of filing of modified return by the applicant.
(6) The applicant, the Assessing Officer or the Commissioner, shall inform the Dispute Resolution Panel or the Commissioner (Appeals) or the Appellate Tribunal or the High Court, as the case may be, the fact of an agreement containing rollback provision having been entered into along with a copy of the same as soon as it is practicable to do so.
(7) In case effect cannot be given to the rollback provision of an agreement in accordance with this rule, for any rollback year to which it applies, on account of failure on the part of applicant, the agreement shall be cancelled.
