Permissible view on interest treatment and abandoned project barred revision, as error and revenue prejudice were not shown.

Revision under section 263 was unsustainable because the Assessing Officer had adopted a permissible view on the treatment of interest payment after the project was abandoned before completion. The assessee's receipts were not income in the normal sense, the business cycle had stopped, and there was no continuing work-in-progress requiring a different tax treatment. The interest liability had crystallised only on settlement during the relevant previous year. On these facts, the assessment order could not be treated as erroneous merely because another view was possible, and prejudice to the Revenue was not established. The revision order was therefore set aside in favour of the assessee.

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Issues: Whether the revision order under section 263 of the Income-tax Act, 1961, was sustainable where the Assessing Officer had accepted the assessee's treatment of the interest payment and the project had been abandoned before completion.

Analysis: The revision could not stand because the assessment was based on a permissible view. The assessee's receipts were found not to be income in the normal sense, the project had come to a halt, and there was no continuing business cycle or work-in-progress in which the disputed interest had to be treated differently. The interest liability had also been crystallized only on settlement during the relevant previous year. On these facts, the assessment order could not be characterized as erroneous merely because another view was possible, and the element of prejudice to the Revenue was not established.

Conclusion: The revision order under section 263 was held unsustainable and was set aside, in favour of the assessee.

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