Revisional jurisdiction under surtax law fails where the assessment adopts a bona fide view on reserves and capital employed.

Revisional power under section 16 of the Companies (Profits) Surtax Act, 1964 is available only when the assessment order is both erroneous and prejudicial to the interests of revenue. On the material before the Surtax Officer, the treatment of the amount standing in the profit and loss appropriation account as part of reserves and surplus for capital employed was one of the possible legal views and was supported by the company accounts. The Commissioner could not revise the assessment merely because a different view was preferred. The original assessment was therefore not shown to be legally or revenue-prejudicial, and revisional jurisdiction was unavailable.

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Issues: Whether the Commissioner could revise the surtax assessment by excluding the amount standing in the profit and loss appropriation account from capital employed for computing statutory deduction, and whether the original assessment order was erroneous and prejudicial to the interests of revenue.

Analysis: The revisional power under section 16 of the Companies (Profits) Surtax Act, 1964 is exercisable only where the assessment order is both erroneous and prejudicial to the interests of revenue. The Surtax Officer had adopted one of the possible views on the character of the amount standing in the profit and loss appropriation account, after considering the relevant statutory provisions and judicial authorities then available. The amount had been carried in the company accounts as part of reserves and surplus and was available for computation of capital employed. On these facts, the order could not be treated as a legal mistake merely because the Commissioner preferred a different view.

Conclusion: The Commissioner lacked justification to invoke revisional jurisdiction, and the original assessment order was neither erroneous nor prejudicial to the interests of revenue.

Ratio Decidendi: Revisional jurisdiction cannot be exercised where the assessment order is a bona fide, legally sustainable view on the material before the Assessing Officer, and an amount carried in the profit and loss appropriation account may be treated as reserve for surtax capital computation if it is available as such in the company accounts.

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