Revision under section 263 fails where the Assessing Officer adopts a possible view supported by precedent on rebate allowability under MAT.

Revision under section 263 is permissible only when the Assessing Officer's order is both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer adopts one of two possible views on the allowability of rebate under section 88E while computing tax under the Minimum Alternate Tax provisions, the order is not revisable merely because the Commissioner prefers a different view. The view taken was supported by judicial precedent and was therefore not treated as erroneous. The revision order was set aside.

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Issues: Whether revision under section 263 was justified when the Assessing Officer had adopted one of the possible views on the allowability of rebate under section 88E while computing tax liability under the Minimum Alternate Tax provisions.

Analysis: Revision under section 263 can be exercised only where the order of the Assessing Officer is both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer adopts a view that is a possible view, the order does not become revisable merely because the Commissioner prefers another view. The view accepted by the Assessing Officer was supported by judicial precedents and could not be treated as erroneous simply because the law might later be settled differently.

Conclusion: The revision order was not sustainable and was set aside. The issue was decided in favour of the assessee.

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