MAT deduction under Section 80HHC must be based on adjusted book profit; revision power under Section 263 could not override that view.

In MAT computation under Section 115JA, deduction under Section 80HHC was to be worked out with reference to adjusted book profit, following the Court's earlier ruling on the same issue. The Assessing Officer's adoption of that view could not be treated as erroneous merely because the Commissioner preferred another interpretation. Since the assessment order reflected a legally sustainable view, revision under Section 263 was not justified and the Commissioner's interference was held unsustainable. The Revenue challenge therefore failed.

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Issues: Whether, in a Minimum Alternate Tax assessment under Section 115JA of the Income-tax Act, 1961, deduction under Section 80HHC is to be computed on the basis of adjusted book profit; and whether the Commissioner was justified in invoking Section 263 to revise the reassessment order.

Analysis: The Court followed its earlier decision holding that, for the purpose of MAT computation under Section 115JA, the deduction under Section 80HHC is to be worked out with reference to book profit as adjusted under the provision. The Assessing Officer's adoption of one possible view consistent with that legal position could not be branded erroneous merely because the Commissioner preferred a different view. Once the first issue was answered against the Revenue, the challenge to the revision under Section 263 did not survive on merits, and the Commissioner's interference was also found inconsistent with the binding hierarchical discipline governing quasi-judicial authorities.

Conclusion: The deduction under Section 80HHC was rightly computed on the basis of adjusted book profit under Section 115JA, and the Commissioner's revision under Section 263 was not sustainable. The appeal failed.

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