Section 263 revision needs real Revenue prejudice, not conjectural future set-off claims from loss and depreciation computations.

Section 263 revision requires demonstrable prejudice to the Revenue arising from the assessment order itself; mere anticipation that computed business loss, unabsorbed depreciation or section 80J deficiency may be set off in a later year is insufficient. The Tribunal held that, where the assessment year record showed no finding that the computation was wrong or excessive, possible future tax consequences were only conjectural and could not justify revising the assessments. On that basis, the Commissioner's revision orders were unsustainable and were set aside for both assessment years, with the original assessments restored.

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Issues: Whether the Commissioner was justified in revising the assessment orders under section 263 of the Income-tax Act, 1961 on the ground that the computation of business loss, unabsorbed depreciation and section 80J deficiency caused prejudice to the Revenue.

Analysis: The assessment year 1976-77 involved a return filed in response to notice under section 148, and the assessment year 1977-78 involved computation made on the footing that the return was filed within time. The Commissioner proceeded on the view that if the losses and allowances were determined, the assessee might claim set-off in a later year. The essential requirement for section 263, however, is prejudice to the Revenue in the assessment under consideration. Mere computation of income, without any finding that the computation was wrong or excessive, does not by itself create such prejudice. Any possible effect in a later year is only prospective and conjectural. The question whether set-off will be available in a later year depends on the statutory conditions then applicable, and cannot justify revision of the present assessment. The determination of section 80J deficiency and unabsorbed depreciation was also treated as not causing any present prejudice, since entitlement to set-off would arise only when claimed and if permitted by law.

Conclusion: The revision orders were not sustainable because no real and substantive prejudice to the Revenue was shown in either year.

Final Conclusion: The assessments were restored and the Commissioner's orders under section 263 were set aside for both assessment years.

Ratio Decidendi: Section 263 cannot be invoked on the basis of mere anticipated or conjectural prejudice; revision requires demonstrable prejudice to the Revenue arising from a wrong assessment order itself, not from a possible future claim of set-off.

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