Section 263 revision must assess the whole assessment order and real tax effect before finding Revenue prejudice.

In section 263 revision proceedings under the Income-tax Act, 1961, the Commissioner must examine the assessment as a whole and not isolate only the part adverse to the Revenue. Where different parts of the assessment may affect the assessee and the Revenue differently, the revisional authority must consider the real tax effect, including the assessee's objections, before deciding whether the order is prejudicial to the interests of the Revenue. The stated conclusion is that revision cannot rest on a fragmented view of the assessment, and the revision order was set aside as unsustainable.

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Issues: Whether, while exercising revisionary power under section 263 of the Income-tax Act, 1961, the Commissioner was bound to examine the assessment as a whole, including aspects beneficial to the assessee, before holding the order to be prejudicial to the Revenue.

Analysis: The assessment could not be viewed in fragments. If one part of the order was erroneous and prejudicial to the Revenue while another part was erroneous but prejudicial to the assessee, the revisionary authority was required to consider the entire assessment to determine the real tax liability. A respondent is entitled to support an order on any ground decided against him, and the question under section 263 is whether the assessment, in substance, is prejudicial to the interests of the Revenue after the assessee's objections are considered.

Conclusion: The Commissioner was required to examine the whole assessment and adjudicate the assessee's contention before invoking section 263. The revision order was not sustainable and was set aside.

Ratio Decidendi: In proceedings under section 263 of the Income-tax Act, 1961, the revisional authority must consider the assessment in its entirety and determine prejudice to the Revenue on the real tax effect, not by isolating only the portion adverse to the Revenue.

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