Revision under section 263 fails where section 115JB was examined and normal tax exceeded book-profit tax.

Revisional jurisdiction under section 263 was found unsustainable where the Assessing Officer had examined the applicability of section 115JB during assessment and completed the assessment under the normal provisions because the tax under those provisions exceeded the book-profit tax. On those facts, the omission to compute or enforce section 115JB did not prejudice the revenue. The revisional authority had to assess error and prejudice on the material available on the assessment date and could not rely on a later appellate order to justify revision. The revisional order was therefore set aside in favour of the assessee.

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Issues: Whether revision under section 263 was valid where the Assessing Officer had examined the applicability of section 115JB during assessment, the tax determined under the normal provisions exceeded the tax on book profit, and the revisional authority relied on a subsequent appellate order to hold the assessment erroneous and prejudicial to the interests of revenue.

Analysis: The assessment records showed that the applicability of section 115JB had been enquired into during assessment. The Assessing Officer nonetheless completed the assessment under the normal provisions because the income and tax computed thereunder were higher than the book profit and tax under section 115JB. In that situation, non-computation or non-enforcement of tax on book profit did not cause prejudice to the revenue. The revisional authority was required to judge error and prejudice on the basis of the material available on the date of assessment and could not rely on a later appellate order to support revision.

Conclusion: The assumption of jurisdiction under section 263 was invalid, and the revisional order was set aside in favour of the assessee.

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