S. 245 R: Advance Ruling-Application-Capital gains- Colourable device -Pendency of proceedings

Applicant MA , a French company , pursuant to an understanding with the other applicant GIMD , also a
French a company having floated a 100 percent subsidiary and acquired majority shares of an Indian
Company in the name of said subsidiary and later both the applicants having sold their shares in the
subsidiary to another French company , it was a preordained scheme to deal with the assets and control of
the Indian Company without actually dealing with its shares thereby avoiding payment of tax on the capital
gains in India and therefore , in view of clause (iii) of the proviso to section 245R(2) Ruling on the question
relating to the taxability of the capital gains arising from the sale of said shares by the applicant was
declined. The Authority also held that nature of proceedings under section 201 on the basis of section 195
are only preliminary and not conclusive and therefore ,pendency of proceedings or order passed under
section 201 against the purchaser of shares cannot in the way of the Authority in giving an Advance Ruling
under section 245 R (4 ).
Groupe Industrial Marcel Dassault, in Re ( 2011) 64 DTR 1 (AAR).