Section 263 revision turns on examined issues and distinct assessment errors: capital gains relief allowed, 80C revision upheld.

Section 263 revision was held unsustainable on the long-term capital gains issue because the Assessing Officer had examined the material in assessment and adopted a permissible view, making the case one of change of opinion rather than lack of enquiry or an error prejudicial to the Revenue. On the excess deduction under section 80C, the assessment was found erroneous in law and the existence of rectification proceedings did not bar revisional action, so revision was upheld on that distinct issue. The appeal was therefore allowed only in part, with relief confined to the capital gains component.

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Issues: (i) Whether revision under section 263 of the Income-tax Act, 1961 was valid in respect of the long-term capital gains issue. (ii) Whether revision under section 263 of the Income-tax Act, 1961 was valid in respect of excess allowance of deduction under section 80C of the Income-tax Act, 1961.

Issue (i): Whether revision under section 263 of the Income-tax Act, 1961 was valid in respect of the long-term capital gains issue.

Analysis: The assessment record showed that the Assessing Officer had called for and examined the relevant material during the regular assessment and had taken a view on the capital gains treatment. The revisional jurisdiction under section 263 can be exercised only where the assessment order is both erroneous and prejudicial to the interests of the Revenue. On the facts, the matter was already examined and a possible view had been adopted, so the case was one of change of opinion and not of lack of enquiry.

Conclusion: Revision under section 263 on the long-term capital gains issue was not sustainable and the assessee succeeded on this issue.

Issue (ii): Whether revision under section 263 of the Income-tax Act, 1961 was valid in respect of excess allowance of deduction under section 80C of the Income-tax Act, 1961.

Analysis: The allowance under section 80C was found to be erroneous in law, and the existence of rectification proceedings did not bar the revisional action on that aspect. The revisional authority was therefore justified in correcting the assessment on this issue.

Conclusion: Revision under section 263 on the excess deduction under section 80C issue was upheld and the assessee failed on this issue.

Final Conclusion: The assessee obtained relief only on the capital gains component, while the revision was sustained on the deduction issue, resulting in a partial allowance of the appeal.

Ratio Decidendi: Section 263 cannot be invoked where the Assessing Officer has examined the material and taken a permissible view, but it may be sustained where the assessment contains an error prejudicial to the Revenue on a distinct issue.

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