The assessee, a Mauritius based company, had made a sizable investment in an Indian non-banking financial company of which the assessee was a majority stakeholder. At the appropriate time, when the share prices were high, the assessee decided to book its profits in part. A portion of the shareholding was off-loaded. This gave rise to a net gain to the tune of about Rs.800 crores. The assessee filed an application under section 197. The Assistant Commissioner carried out detailed inquiry in relation to such application of the assessee. He called upon the assessee to provide several documents which the assessee did. At the end of the inquiry, the said authority passed an order rejecting the application of the assessee for certificate under section 197 of the Act on the ground that the entire transaction was not genuine. On writ the Court held that the mere fact that the assessee-company had not transacted any other business by itself may not be conclusive.  The observation that mere transfer of money through banking channels would not be conclusive, may be correct but it could not be a ground against the assessee unless there was adverse material. The extent of administrative expenditure and the employment structure may be some of the factors which eventually would go to establish whether the transaction was sham and the very existence of the assessee was fraudulent, but by themselves they were not sufficient. The order dated June 20, 2018 passed under section 197 of the Act had to be quashed. The Revenue may invoke the “substance over form” principle or “piercing the corporate veil” test only after it is able to establish on the basis of the facts and circumstances surrounding the transaction that the transaction is a sham or tax avoidant. After balancing the equities, the court directed the respondents to release the withheld payment subject to adjustment in the assessment.