You are running the query through SQL Assistant and if you look in Tools/ Options/ Query you will see that Allow Use of ODBC Extensions In Queries is allowed. Microsoft ODBC interface is translating your query to what Bill thinks you want.
Turn this off and run the query again, and you get syntax error.
Microsoft ODBC interface does not attempt to translate DDL statements, so you get an error with or without that option.
replace view TEST_V as sel Extract(YEAR from Current_Date - 1) as TEST_YR