Cit vs Max India Ltd.

The Supreme Court clarified that under Section 263 of the Income Tax Act, the phrase 'prejudicial to the interests of the revenue' must be read with 'erroneous' order, emphasizing that not every loss of revenue constitutes such prejudice. The Court held that the view taken by the assessing officer, which was one of two permissible interpretations of Section 80HHC, could not be deemed erroneous, especially given the complexity and multiple amendments to the section. Consequently, the appeals by the department were dismissed, affirming the validity of the assessing officer's order.