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Issues: (i) Whether the revisional order under section 263 of the Income-tax Act, 1961 was valid when the Assessing Officer had accepted the assessee's claim on the nature of receipts from supply of manpower.
Analysis: The assessment records showed that the Assessing Officer had called for the relevant agreements, examined the assessee's explanation, and taken a view that the receipts were not fees for technical services or fees for included services. A revision under section 263 could be sustained only if the assessment order was both erroneous and prejudicial to the interests of the Revenue. The material on record did not support the view that the Assessing Officer had failed to examine the issue. The earlier Tribunal decision on the same arrangement also supported the view that the primary service was akin to recruitment or placement and did not amount to making available technical knowledge, skill, plan, or design.
Conclusion: The revisional jurisdiction under section 263 was not validly invoked and the assessee succeeded on this issue.
Ratio Decidendi: Where the Assessing Officer adopts one of two possible views after examining the relevant material, revision under section 263 cannot be sustained unless the order is shown to be both erroneous and prejudicial to the interests of the Revenue.
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