The assessees undertook investment activities and earned long-term capital appreciation and investment income. The Assessee made application before Authority for Advance ruling for claiming benefit of double taxation benefit and other reliefs.Authority for Advance Ruling rejected the application. On writ  allowing the petitions,  Mere routing of  investments through Mauritius cannot result in drawing adverse inference or  raise presumption of  illegality or treaty abuse. Order of  Authority for Advance Rulings denying benefits illegal and unsustainable. Certificate of residence issued by Mauritius Authorities would constitute sufficient and valid evidence. Circular No. 682, Dated 30-3-1994  (1994) 207 ITR (St) 7,  Circular No. 789, Dated 13-4-2000 (2000) 243 ITR (St) 57. Applicant is  not liable to tax on capital gains on transfer of shares to another non-resident. Treaty will prevail over provisions of Act. Subsidiaries have distinct and independent persona. Order of Authority for Advance Rulings holding that Article 13(3A) applicable only to sale of shares of resident company assessee not covered by Article 13(3A)  is unsustainable. Court also held that  the law does not raise a presumption of illegality or disreputability to foreign investments that may be made through entities domiciled in Mauritius. It would be wholly incorrect to presume investments originating from Mauritius as being inherently dubious or disreputable. Thus, the mere fiscal residence of an entity in Mauritius would not give rise to a presumption of infamy or constrain courts to approach such investments through what are metaphorically referred to as tinted lenses. The Supreme Court in unequivocal terms held that there was nothing inherently abhorrent in treaty shopping given the economic compulsions of nations who are desirous of attracting foreign investment. Mauritius and entities domiciled in there are neither liable to be viewed on a negative plane nor are they obliged to satisfy a separate standard of legitimacy. The stand struck by the two Contracting States clearly dispels any assumption of a roll back of the Mauritian route or an avowed intent to place residents of that nation to a stricter degree of proof. The data relating to investments flowing from that nation and in terms of the facilitative Double Taxation Avoidance Agreement regime lays all doubts, in this respect, to rest. The tests of a legitimate investment stand duly incorporated in the Double Taxation Avoidance Agreement between India and Mauritius and the various protocols entered into from time to time representing the exclusion of those which are not intended to reap the benefits of the Convention. The adoption of the limitation of benefits provisions was clearly intended to subserve those objectives. The intent of the Contracting States to adhere to the globally accepted standard of substance over form stands further fortified from the recent protocol which has been executed and is yet to be notified. The Union and the Revenue have accepted the legal position as enunciated in the Supreme Court decisions in UOI  v. Azadi Bachao Andolan (2003) 263 ITR 706 (SC)   and Vodafone International Holdings B.V. v. UOI (2012) 341 ITR 1 (SC),which had acknowledged the invocation of the substance over form principles to the confined and extremely narrow contingencies where the Revenue may be recognised as being justified in questioning the motives of an investment transaction. The principles of substance over form must be considered to be the prevailing norm and the Revenue is entitled to doubt the bona fides of a transaction only in those situations where it is found that the transaction involves a sham device intended to achieve illegal objectives or formulated based on illegal motives.   (AY. 2018-19).