The transmitter-receiver pairs in FHEM surveys are rigidly mounted within the bird towed below the helicopter and therefore, variations in measurement height are unavoidable. The resistivity models obtained from inversion are misleading unless the effects of the measurement height errors, especially in mountainous terrains and forested areas. This paper investigates a specific issue, that of the height error effects, which needs to be addressed when high-resolution FHEM data are to be interpreted accurately. Here, we have probed the influence of the measurement height errors on the FHEM data and accepted necessity of including measurement heights into the inversion process as model parameters. Subsequently, we use a pseudo-2D inversion scheme that simultaneously solves for resistivity and flight height using vertical and horizontal constraints along the flight line. The synthetic examples show that when height is incorporated, the reconstructed resistivity values are less affected by errors in altitude and very close to that obtained from the inversion using the correct height.