The Bombay High Court held that where the Assessing Officer had not examined the issues relating to deduction under section 32AB and computation of book profits under section 115J in the original assessment, the Commissioner validly assumed jurisdiction under section 263, since absence of enquiry rendered the assessment order erroneous and prejudicial to the interests of the Revenue. The Court held that the validity of revisional jurisdiction must be tested on the basis of the legal position prevailing on the date the Commissioner exercised such jurisdiction, and a subsequent decision of the Supreme Court in Apollo Tyres Ltd. could not be relied upon to invalidate the revision. It was further held that the Commissioner’s operative order had to be read holistically and the assessee could not isolate one sentence to contend that a final finding on merits had been given; the Commissioner had only directed fresh examination in accordance with law. Since the assessee had not challenged the order passed by the Assessing Officer giving effect to the section 263 order, the assessee could not be permitted to indirectly agitate the merits in appeal against the revisional order. The Tribunal’s order upholding the exercise of jurisdiction under section 263 was affirmed.(AY. 1988-89)