Section 263 revision fails where deferred sales tax payment at net present value is a possible view and Section 41(1) does not apply.

Deferred sales tax paid prematurely at net present value was treated as not amounting to remission or cessation of liability under Section 41(1) of the Income-tax Act, so the Assessing Officer's view that the provision was not attracted remained a possible view. In that setting, revision under Section 263 could not be sustained merely because the Commissioner preferred another interpretation, as an assessment based on one permissible view is not erroneous for Section 263 purposes. The result is that the revisional action was held unsustainable.

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Issues: Whether the revisionary order under Section 263 of the Income-tax Act could be sustained in respect of deferred sales tax payment where the Assessing Officer had taken a possible view that Section 41(1) of the Income-tax Act was not attracted.

Analysis: The assessee had availed the benefit of a deferred sales tax scheme and made premature payment at the net present value of the deferred liability. The Assessing Officer accepted the assessee's treatment and did not invoke Section 41(1). The Commissioner revised the assessment under Section 263 on the premise that the order was erroneous and prejudicial to the interests of the Revenue. The Tribunal held that two views were possible and that an order based on one possible view could not be treated as erroneous for the purpose of Section 263. The appeal was also considered in light of the Supreme Court's ruling that premature payment of deferred sales tax at net present value does not amount to remission or cessation of liability within Section 41(1), and that the conditions for applying that provision were not satisfied.

Conclusion: The revision under Section 263 was unsustainable and the Revenue's appeal failed.

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