DDIT, DEHRADUN vs. BG EXPLORATION & PRODUCTION INDIA LTD., MUMBAI

1. Whether on the facts and in circumstances of the case, the Hon'ble Dispute Resolution Panel ('DRP') has erred in holding that the Assessing Officer/Transfer Pricing Officer ('AO/TP0') was wrong in rejecting the economic analysis conducted by the assessee for the determination of the Arm's Length Price ( 'ALP') in connection with the transactions pertaining to Management Service and Unit charges ( `MSU Charges') and General & Administrative Expenses ('G& A').

1.1 The Hon'ble DRP has erred in holding that the Transactional Net Margin Method('TNMM) and Operating Profit Margin based on the Sales as the Profit Level Indicator („PLI‟) as used by the assessee is the most appropriate method in the facts of the case solely on the ground of difficulty in availability of reliable data of comparables, not appreciating the fact that the selection of the most appropriate data is a function of several factors.

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 1.2 The Hon'ble DRP has erred in not appreciating the finding of the AO/TPO that the Comparable Uncontrolled Price ('CUP') method was the most appropriate method in this case and that the ALP as determined by the economic analysis conducted by the assessee was inappropriate as: i) The assessee has not been able to show as how these transactions are intrinsically linked with the other international transactions undertaken by the assessee (e.g. payment on interest on loan, sale of gas, unsecured loans taken or reimbursements made) and there is no link with the transactions under consideration and the other international transactions ii) It is only when the international transactions are so closely linked that they cannot be benchmarked that a combined approach can be adopted as per Rule 10A(d) of the Income Tax Rules iii) Given the nature of the transactions in this case, each transaction has to be benchmarked separately and not under TNMM. v) The assessee has adopted a combined approach with regard to its business transactions as a whole which is contrary to the provisions of law. v) The approach followed by the assessee was not in accordance with the OECD guidelines with regard to the intra-group services in terms of which cost of intra-group services should be benchmarked using either CUP or Cost Plus Method.

2.1 The Hon'ble DRP has erred in not appreciating the findings of the AO/TPO that DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 a) The assessee has not been able to establish that it has actually received any intra-group G & A services. b) Beyond a description of the services, no evidence, much less concrete evidence, establishing the actual rendering of services has been provided. c) The bulk of the so-called 'evidence' furnished during the proceedings before the TPO as well the DRP consists of the debit notes, manuals, policy documents, mention of budget amounts, internal correspondence, which by themselves do not establish that such services have actually been received by the assessee d) The assessee has not been able to establish the economic and commercial benefits derived by it on account of such services e) Without prejudice to the above, the cost allocation amongst the different units or associate enterprises, purportedly on the basis of the reports of external consultants, are completely arbitrary as they are based on ad-hoc factors like head-counts & hourly rates etc. and prepared by the external consultants on the basis of the inputs on such ad-hoc factors given by the AEs themselves f) No comparable independent enterprise would comparable circumstances have paid for the services in g) Without prejudice to the findings regarding the actual rendering of services and the non-existence of the economic or commercial benefit derived by the assessee, the services are essentially in the nature of share-holders/stewardship services which are for the benefit of the parent company and hence to that extent the ALP is liable to be treated as Nil.

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 2.2 The Hon'ble DRP has erred in not appreciating the fact that in terms of the Joint Operating Agreement (`JOA'), all costs are shared among the joint venture partners in ratio of their participating interest and that the two other parties to the JOA (M/s ONGC and Reliance Industries Ltd) , which are unrelated parties, would not pay the cost of the services of associate enterprises which would have been in excess of the ALP.

3. Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in directing the AO/TPO to drop the proposed adjustment of Rs. 1,52,09,65,985/-on account of disallowance of Management Service and Unit Charges [consisting of Federal Green Recharges of 14,85,73,458/-, Management & Unit Recharges of Rs. 1,22,95,73,659/- and Technology Recharges of Rs. 14,28,18,869/-) paid by the assessee to M/s B.G. International Ltd ( 'BGIL')

3.1 The Hon'ble DRP has erred in not appreciating the findings of the AO/TPO that a) The assessee has not been able to establish that it has actually received any services in lieu of the Management Service & Unit Charges. b) Beyond a description of the services, no evidence, much less concrete evidence, establishing the actual rendering of services has been provided. c) The bulk of the so-called 'evidence' furnished during the proceedings before the TPO as well the DRP consists of the debit notes, manuals, policy documents, mention of budget amounts, internal correspondence, which by themselves do not establish that such services have actually been received by the assessee d) The assessee has not been able to establish the economic and commercial benefits derived by it on account of such services e) Without prejudice to the above, the cost allocation amongst the different units or associate enterprises, purportedly on the basis of the reports of external consultants, are completely arbitrary as they are based on ad-hoc factors like head-counts hourly rates etc. and prepared DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 by the external consultants on the basis of the inputs on such ad-hoc factors given by the AEs themselves f) No comparable independent enterprise would have paid for the services incomparable circumstances g) There is an element of duplication in respect of some of the services comprised in the Management Service & Unit Charges (Accounting, Taxation, Cost Control etc.) claimed to have been rendered by M/s BGIL in that the India Project Office is also independently looking after such functions. h) Without prejudice to the findings regarding the actual rendering of services and the non-existence of the economic or commercial benefit derived by the assessee, the services are essentially in the nature of share-holders/stewardship services which are for the benefit of the parent company and hence to that extent the ALP is liable to be treated as Nil.

3.2 The Hon'ble DRP has erred in not appreciating the fact that in terms of the Joint Operating Agreement (JOA'), the all costs are shared among the joint venture partners in ratio of their participating interest and that the two other parties to the JOA( M/s ONGC and Reliance Industries Ltd) , which are unrelated parties, would not pay the cost of the services of associate enterprises which would have been in excess of the ALP

4. Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in directing the AO/TPO to restrict the proposed adjustment of Rs. 22,58,422/- on account of the loan transaction between the assessee and M/s BG Asia Pacific Holding Ltd (BGAPHL) to Rs. 14,61,247/-only.

4.1 The Hon'ble DRP erred in holding that the AO/TPO was wrong in working out the adjustment on the basis of an interest rate of 12.5% as the loan transaction under consideration was in the nature of a forced transaction, having arisen due to the action of the AO in unilaterally adjusting a refund due to the assessee against a demand due from M/s DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 BGAPHL in a previous year (which was subsequently reduced in first Appeal resulting into a refund in the hands of M/s BGAPHL which in turn paid back the amount to the assessee without any interest).

4.2 The Hon'ble DRP erred in not appreciating the fact that once a transaction admittedly takes the character of a loan between associate enterprises, it becomes immaterial whether or not the transaction was undertaken voluntarily and therefore, the receipt of the loan amount from M/s BGAPHL without charging any interest, called for adjustment at an appropriate interest rate on account of benefit availed by BGAPHL 5 Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in directing the AO/TPO to drop the proposed addition of Rs. 39,59,606 on account of expenses claimed to have been incurred in relation to club entrance and subscription fees for its employees 5.1 The Hon'ble DRP has erred in not appreciating the fact the expenses under consideration are admittedly in the nature of club expenses and hence the same cannot be said to have been incurred wholly and exclusively for the purposes of the business of the assessee.

6 The appellant prays for leave to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal.

2. The Assessee in his cross objection raised the following grounds of appeal for the Assessment Year 2009-10 in CO. 13/Del/2015 in :- “1. The learned DRP / AO erred in law and in facts in disallowing Rs. 503,071,917 in respect of exploration cost reimbursed to ONGC. Without prejudice, the learned AO erred in not stating that the expenditure of Rs. 503,071,917 should be allowed as a deduction in the year in which DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 the expenditure became infructuous i.e. in the year in which the area was surrendered prior to commercial production viz. financial year 2011-12. In this connection, having regard to the observations made by the DRP in its directions, the appellant has filed a revised return for assessment year 2012-13 (corresponding to financial year 2011-12) in order to safeguard its claim of deduction for the said expenditure. CROSS OBJECTION NO. 2: Recovery of expenses from BG Asia Pacific Holding Ltd. ("BGAPHL">

2. The unilateral act of the learned AO of wrongly adjusting the appellant's refund with the demand of the associated enterprise i.e. BGAPHL is not an international transaction, accordingly, the amount of interest added to the income of the appellant by the learned AO should be deleted. CROSS OBJECTION NO. 3: Erroneous initiation of penalty proceedings

3. The learned AO erred in law and in facts in initiating penalty proceedings under section 271(l)(c) of the Act. CROSS OBJECTION NO. 4: Erroneous levy of interest

4. The learned AO erred in law and in facts in directing to charge interest under sections 234A, 234B and 234C disregarding the fact that the appellant is a non-resident whose income is subject to tax deduction at source, CROSS OBJECTION NO. 5: General

5. Each one of our grounds of objection is without prejudice to the other.”

4.4. The assessee is receiving services under different heads, namely, A. General and Administrative, B. Information Management related services, C. Management and Unit Charges D. Federal Green Charge E. Technology Recharge i F. Payroll Expenses ' : ' The assessee has provided voluminous documents which are containing the following Pages: DRP Submission S.No. Volume No. No. of pages 1 Volume -III 390 2 Volume-IV 853 3 Vclume-VA 534 4 Volume-VB 671 5 Volume-VIA 665 6 Volume-VlB 590 7 Volume-VII 898 8 Volume-VIII 394 Total Pages of DRP Submission 4995 Additional submission to DRP S.No. Volume No. No. of pages 1 Volume-1 528 2 Volume-2A 495 3 Volume-28 489 4 Volume-3 417 5 Volume-4 490 6 Volume-5 431 DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 Total Pages of Additional 2850 Submission to DRP Total Pages 7845 4.5. The main objection of the TPO was that assessee has not produced the evidence and assessee has not established receiving any benefit on account of receipt o/this service. The above voluminous documents were further summarized by the assessee with reference to each and every pages submitted before the DRP and the TPO. The summary of the evidences and the benefit received on account of these services are reproduced below: A. . GENERAL & ADMINISTRATIVE EXPENSES i. T THIRD PARTY Description of services received | Salary & other costs - These costs primarily pertain to Employee Stock Option Plan ("ESOP") exercised by BGEPIL employees. BGEPIL employees receive shares from the parent company as Stock Options. These shares are allotted at "NIL" cost to the employees. However, the cost relating to these shares are subsequently recovered/charged to individual asset. Relocation costs - This head comprise costs in respect of relocation of assignees/employees including familiarization expenses, travel costs, cost of transporting the assignees personal belongings, storage costs, etc. also form a part of this head. Consultancy fees , - Consulting services mainly comprise of services availed from third parties by BG/L on behalf of the assessee. For instance, services were availed from global tax and legal firms in relation to expat taxation of the BG employees. Professional subscriptions and license cost - Professional subscriptions and license cost mainly comprise of payments made for subscription to journals magazines and other reports relevant to the business sector of - the assessee viz. oil and gas journals, fees paid for Platts reports, fees paid for reports issued by Society of Petroleum Engineers/other professional institutes (i.e. Geoquest/PEEP/HIS DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 Energy/Schlumberger, other energy industry related publications etc.). Bank charges ; - Bank charges are predominantly recovery of cost incurred by BGIL in arranging for providing bank guarantee to BGEPIL. i Travel & Subsistence Travel and subsistence refers to business travel expenses incurred by BGIL on behalf of the assessee. Also includes cost of meals, per diem expenses and other incidental charges. Diminimus charges - Diminimus charges are expenses incurred by BGIL in relation to the expats on phone calls/visa cost/insurance cost/familiarization cost. These costs are incurred on the employees either seconded to India or travelling to India for a project. Thus, these costs are asset specific cost. General and Administrative expenses -Service tax - Service tax represents amount of tax paid on the services received from BGIL towards G&A. . -Evidence filed before the TPO (forming part of paper-book filed with Form 35A on 6, 2014) Salary & other costs ' Sample copies of relevant debit notes along with third party invoices/documents to demonstrate the actual receipt of services and benefits received thereon. (Page 259 to 293 of Volume IV of the Paperbook) > Relocation costs : Sample copies of relevant debit notes along with third party invoices/documents to demonstrate the actual receipt of services and benefits received thereon. (Page 294 to 296 of Volume IV of the Paperbook) Consultancy services Sample copies of relevant debit notes along with third party invoices/documents to demonstrate the actual receipt of services and benefits received thereon. (Page 297 to 394 of Volume IV of the Paperbook) Professional subscriptions and license cost Sample copies of relevant debit notes along with third party invoices/documents to demonstrate the actual receipt of services DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 and benefits received thereon. (Page 325 to 330 of Volume IV of the Paperbook) Bank charges Sample copies of relevant debit notes along with third party invoices/documents (on sample basis) to demonstrate the actual receipt of services and benefits received thereon. (Page 331 to 336 of Volume IV of the Paperbook)

Travel & subsistence Sample copies of relevant debit notes along with third party invoices/documents to demonstrate the actual receipt of services and benefits received thereon. (Page 337 to 363 of Volume IV of the Paperbook) Diminimus charges. Sample copies of relevant debit notes along with third party invoices/documents to demonstrate the actual receipt of services and benefits received thereon. (Page 364 to of Volume 493 of the Paperbook). : Service tax Copy of the service tax return comprising of service tax paid in respect of services received from BGIL and IDS certificate in respect of services received from BGIL. (Page 494 to 517 of Volume IV of the Paperbook) : III. Additional evidence filed before Ld. DRP onNovember 7, 2014 General and Administrative expenses - Travel & Subsistence Sample inter-company debit notesand American Express copies which demonstrate the :'~- travel of the employee for India project for the relevant period and third party costs for the same: ! XXXXXX (Refer Page 1 to 202 of Volume 1 of the additional evidence Paper book) General and Administrative expenses - Others General & Administrative (G&A) Manual for use by the Global Finance team prepared by BGIL to provide clarity around G&A costs within BG and in so doing bring consistency in understanding and treatment of G&A costs within the Group. - (Refer Page 203 to 259 of Volume 1 of the additional evidence Paper book)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 IV. Benefits derived Salary & other costs : It is an expense incurred to retain, motivate and award employees of subsidiary company, it is similar to salary cost and it is business expenditure. Consultancy services Services availed from global tax and legal firms in relation to expat taxation of the BG employees. Professional subscriptions • Reduction in wastage of time, efforts and cost as BGIL procures these licenses for the common use and benefit of BG group entities including BGEPIL • BGEPIL has access of global business information relating to Oil and gas industry • Access to the knowledge pool and huge database of information and technical knowledge. ; . Relocation, Bank charges. Deminimus charges ; The expenses pertaining to these services are in relation to administrative convenience incurred particularly in arranging for providing bank guarantee to BGEPIL, rent or hotel expenses incurred by the employees of BGIL while providing various services. Travel & subsistence These expenses pertain to BGEPIL BGEPIL has reimbursed the travel and subsistence expenses to BGIL. These are pure third party costs. ii. TIME WRITING I. Description of services received : Technical and engineering consultancy services - Time writing charges • The costs recharged on account.of technical and engineering consultancy services include specific time-writing costs booked by the employees of BGIL for assistance with development projects that were proposed for the PMT oi! fields • Technical experts whose assistance has been availed by the assessee inter alia include engineers, project risk experts, DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 subsurface assurance managers, contracts/procurement managers and geophysical managers Evidence filed before the TPO {forming part of paper-book filed with Form 35A on May 6, 2013) Table of benefits detailing the description of the services, mode of receiving the services, benefits derived and a list of documentary evidence {in the nature of debit notes, invoices and back-up of document providing details of personnel of BGIL who have written time on India projects) in support of the time writing charges. (Pcge 99 to 513 of Volume VlI of the Paperbook and Page 516 to 772 of Volume IV of the Paperbook) Additional evidence filed before Ld. DRP on November 7, 2014 • Sample high value inter-company debit notes (above INR 10 lakhs) which demonstrate that the time writing charges were in relation to the work done on India projects and the invoice was raised accordingly. Further, the description of time writing cost sheet demonstrates that the same pertains to the India project. XXXXXXX (Refer Page 260 to 518 of Volume 1 of the additional evidence Paper book) Timesheets of individuals evidencing the actual work done pertaining to India projects. The said timesheet clearly demonstrates that those employees had worked in relation to which cost has been charged to BGEPIL. • Sample inter-company debit notes and Skill Supply Agreement copies which demonstrate that the time writing charges were in relation to the said SSAs and the invoice was raised under the said SSA. Further, the description of time writing cost sheet demonstrates that the same pertains to the India project. (Refer Page 236 to 281 of Volume 1 of the additional evidence Paper book) • Timesheets of individuals evidencing the actual work done pertaining to India projects. The said timesheet clearly demonstrates that those employees had worked for the SSA's in relation to which cost has been charged to BGEPIL (Refer Page 282 to 294 of Volume 1 of the additional evidence Paper book)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 • Email evidences containing employee declarations (for sample SSAs) demonstrating that actual work done pertains to India projects. Copies of reports made by such employees under the SSA. (Refer Page 296 to 532 of Volume 1 of the additional evidence Paper book) IV. Benefits derived Expatriate employees provide technical assistance as required by BGEPIL which assists them in terms of quality, industry details, understanding global ideas and best practices which BGEPIL would not have ready access. B. MANAGEMENT AND UNIT RECHARGES - INFORMATION MANAGEMENT ('HWl RELATED SERVICES I. Description of services received (a) IT support services - Seamless IT support to the assessee's personnel on any IT issues faced by it on a day-to-day basis. Undertaking network improvements on a scheduled basis. (b) Email services - E-mail related support services in the nature of creating standardized corporate e-mail account for all employees across the globe, maintaining control on making each e-mail account a separate and unique e-mail account, managing e-mail services. (c) BG Intranet Portal - Development and maintenance of the portal! is undertaken by BGIL. BGIL inputs various policies and guidelines of the group on the intranet portal. (d) Internet services - Provision of internet access to assessee. Maintenance of internet services to ensure assessee is protected from cyber-attacks and cyber-crime. Monitoring activities of various employees on internet and corrective actions taken in case of reports of hacking, etc. (e) Enabling mobile/offsite working - 24X7 platform provided by BGIL so that assessee's personnel can work even if not in office. (f) IM Central Services - Access to various licenses purchased by BGIL from third parties such as Procon license, Oracle license, Cognos license, SAP license. Receives support in case of any issues faced by BGEPIL in using SAP Oracle etc. Benefits derived IT support services DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 (a) Access to highly experience and technical IT resources without having to invest in an in-house dedicated IT team. Thus, reduction in downtime and idle time cost. (b) Reduction in investment on standby assets as such standby assets are owned and maintained by BGIL. {c) Consistent IT platform and infrastructure maintained by BGIL which provides assesse access to the knowledge pool and huge database of information and technical knowledge. Further, consistent IT platform also ensures on-time performance of services. Email services (a) Corporate e-mail account ensures confidentiality of sensitive information closely associated with the applicant's business and gives it better control over use of email by personnel for personal use. (b) Enables assesse to track the trail of e-mails much faster. (c) A separate and unique e-mail account enables the assessee to have better control over the use of e-mails by its employees. (d) Creating a corporate e-mail provides opportunity to the assessee to prescribe structure of e-mails to employees and for standardization of e-mail communications for specific purposes/events. (e} Assessee receives the benefit of on-going and continuous development in IT arena. BG Intranet Portal , Reduction in wastage of time, efforts and cost on the following grounds:  Portal provides a platform for and facilitates networking of employees;  Ready access to the employees of support function of the assesse on the policies and guidelines i.e. accounting policy manual etc.; and !  Such standard documents assist the assessee in formulating / implementing similar controls in place easily. internet services a. Maintenance of internet services to ensure assessee is protected from cyber-attacks and cyber-crime.

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 b. Monitoring activities of various employees on internet and corrective actions taken in c. case of reports of hacking etc. (c} Ensure uniform connectivity as per the assessee's requirements. d. Corrective actions against hacking enable asessee to function efficiently at lower cost. e. Monitoring internet activities of employees creates awareness and control among each employee in usage of internet facilities only on need basis. Avoidance of unnecessary II. Benefits derived IT support services • . l:- -.". -; . a) Access to highly experience and technical IT resources without having to invest in an in-house dedicated IT team. Thus, reduction in downtime and idle time cost. b) Reduction in investment on standby assets as such standby assets are owned and maintained by BGIL. c) Consistent IT platform and infrastructure maintained by BGIL which provides assesse access to the knowledge pool and huge database of information and technical knowledge. Further, consistent IT platform also ensures on-time performance of services. Email services . [ a) Corporate e-mail account ensures confidentiality of sensitive information closely associated with the applicant's business and gives it better control over use of email by personnel for persona! use. b) Enables assesse to track the trail of e-mails much faster. c) A separate and unique e-mail account enables the assessee to have better control over the use of e-mails by its employees. d) Creating a corporate e-mail provides opportunity to the assessee to prescribe structure of e-mails to employees and for standardization of e-mail communications for specific purposes/events. e) Assessee receives the benefit of on-going and continuous development in IT arena. BG Intranet Portal , Reduction in wastage of time, efforts and cost on the following grounds: Portal provides a platform for and facilitates networking of - employees; DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 Ready access to the employees of support function of the - assesse on the policies and guidelines i.e. accounting policy manual etc.; and ; - Such standard documents assist the assessee in formulating / implementing similar controls in place easily. - - Internet services a. Maintenance of internet services to ensure assessee is protected from cyber-attacks and cyber-crime. b. Monitoring activities of various employees on internet and corrective actions taken in case of reports of hacking etc. c. Ensure uniform connectivity as per the assessee's requirements. d. Corrective actions against hacking enable asessee to function efficiently at lower cost. e. Monitoring internet activities of employees creates awareness and control among each employee in usage of internet facilities only on need basis. Avoidance of unnecessary of internet for playing games etc. Thus, optimal utilization of bandwidth for official purpose. Enabling mobile/offsite working ,  Ensures continuity of work and optimum utilization of time of the employees of assessee.  Encryption and safety precautions taken care of  Saving of cost by allowing an employee to work from anywhere in the world. IM Central Services t : a. SAPS, Oracle etc., are crucial for day to day functioning of business. b. Purchase of such license by BGiL for all group entities leads to cost efficiency. c. Cost savings to BGEPIL - not required to employ fully dedicated personnel to provide support on issues faced in using SAP etc. III. Evidence filed before the TPO (forming part of paper-book filed with Form 35A on May 6,2014 ! ^ (a) Inter-company debit notes ' ! Sample copies of ICDNs with details of nature of expenses and the costs associated under each such expense head: ' DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10  ICDN No. 1-17:IM Recharges by BGIL to BGEPIL proportionately on the basis of number of users in BGEPIL to total users of BG Group (Page 49 to 98 of Volume VII of the Paperbook) (b) Cost Allocation Methodology -Lancaster Maclean report certifying cost allocation methodology PricewaterhouseCoopers report certifying cost allocation policy (c) Documents to evidence receipt of service Sample copies of e-mails stating service being provided in the nature of installation of windows security on the servers of the assesse, continuous monitoring of the server for up gradation, resolving day to day IT issues faced by the personnel of the assessee etc. (Page 824 to 947 of Volume VB of the Paperbook) IV. Additional evidence filed before Ld. DRP on November?, 2014 a) Sample copies of Inter Company Debit Notes ("ICDNs") with details of nature of expenses and the costs associated in relation to IM services. This includes IM Recharges by BGIL to BGEPIL proportionately on the basis of number of users in BGEPIL to total users of BG Group. (Page 1 to 75 of Volume 2A of the Additional evidence Paperbook) ( i - - \ XXXXXXXX b) Snapshots of the list of applications to which personnel of assessee have access to(Page 76 to 77 of Volume 2A of the Additional evidence Paperbook) c} List of users at BGEPIL having access to some of the technical applications Page 78 to 79 of Volume 2A of the Additional evidence Paperbook) d) Snapshots of the intranet portal maintained by BGIL which is accessible to all the Group entities including BGEPIL ( Page 80 to 96 of Volume 2A of the Additional evidence Paperbook) e) Detailed list of sophisticated IT application to which personnel of assessee have access to where day to day operations of the assessee are carried outrage 97 to 495 of Volume 2A of the Additional evidence Paperbook and Page 1 to 489 of Volume 28 of the Additional evidence paper book) C. MANAGEMENT AND UNIT RECHARGES - HR. ACCOUNTS. TAXATION, INSURANCE ETC I. Description of services received HR support - DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 Support on deployment of globally mobile expatriate staff:  BGIL's HR international team coordinates all expat requirements based on nature of work, profile of activities, resource availability, cost factors, etc.  Manages issues connected with the transfer of staff between various projects of BG group entities including the assessee, repatriation of staff at the end of a secondment etc.  . Managing the international movement of Indian nationals who go to other business units within BG group for developmental assignments.  For areas like compensation and benefits, standards and methods are developed, managed and monitored centrally to ensure consistency of process. Accounting and Taxation support  Financial systems and analysis - Main financial systems (SAP, Cognos etc.) used by the assessee are managed centrally by BGIL Implementation of such systems, training and provision of ongoing advice undertaken by BGIL.  Financial technical accounting and assurance support - Implementation of various international accounting principles, training the assessee's employees and solving their queries on a day to day basis, if any.  Financial Reporting - Assistance on internal and external financial reporting  requirements. Provides advice to the assessee on the group financial reporting  requirements and policies and impact of local projects on the overall financial  reporting. .  Management reporting - Guidance provided to assessee on corporate requirements, collection of data and other management reporting matters.  Assistance on local taxation issues - Guidance on how the particular tax position will be looked at in international parlance in view of head office being located in overseas country. Assistance on local and group tax accounting matters. Assistance on managing tax audits/ assessment/ appeals and other issues as and when required Insurance support : Support on insurance related matters DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10  Look after insurance coverage of various assets and activities of BG group entities including the assessee  Assists in obtaining necessary insurance coverage to protect the BG group entities including the assessee from potential / possible loss in case of an unforeseen event  Assistance in managing and making insurance claims and dealing with settlement and other issues , II. Evidence filed before the TPO (forming part of paper-book filed with Form 35A on May 6,2014 Human Resources a) A manual in relation to Business Travel and Expenses Standard which is governed by BG Groups Human Resources Policy and sets mandatory requirements regarding undertaking business travel on behalf of BG Group and the claiming of expenses associated with business travel and other business activities Page 535 to 562 of Volume VBofthe Paperbook) b) A talent management model of BG group which summarizes the potential qualities and skill set which is required to be maintained by BG group employees (Page 563 to 575 of Volume VB of the Paperbook) c) E-mail correspondences by BGIL sloganing young leaders research being recommended as a measure that would be researching on the graduate population to provide support to BGEPIL Input provided thereby by BGIL {Page 676 to 678 of Volume VBofthe Paperbook) d) E-mail correspondences by BGIL demonstrating support provided by BGIL to BGEPIL on training, on job learning, vendor supportive web based tools along with the competency and development review for employees. Power point presentations projecting appropriate training and ADR approach, the 360 tool and wallet cards are being attached for reference {Page 611 to 640 of Volume VB of the Paperbook)] e) E-mail correspondences by BGIL which demonstrates the international placement policy communicated to BGEPIL specifying the placement criteria along with the cost of living and salary caps. The policy stands attached herewith.(Page 679 to 733 of Volume VB of the Paperbook) . f) E-mail correspondences by BGIL in relation to the recruitment policies. Power point presentations demonstrating graduate development move projections necessary as a recruitment DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 agenda for BGEPIL (Page 607 to 608 of Volume VB of the Paperbook) g) E-mail correspondences by BGIL which demonstrates that BGEPIL avails support in relation to Annual Incentive Scheme performance and Salary Review along with the progression panel considering the employer-employee relationship with a long term perspective. (Page 607 to 608 of Volume VB of the Paperbook) h) Snapshots on global mobility and demonstration on professional and area development. Employee resourcing and recruitment strategy summary of Poge 735 to 741 of Volume VB of the Paperbook) i) Extract of Service agreements providing certain staff, support and personnel services of Page 808 to 823 of Volume VB of the Paperbook) Accounting. Finance. Taxation & Legal support ! a. E-mail correspondences evidencing support received from BGIL in relation to accounting matters fPageSSS to 590 of Volume VB of the Paperbook) b. E-mail correspondences evidencing substantial support received from BGIL in relation to taxation and provisioning mattersfPage 578 to 581 of Volume VB of the Paperbook) c. E-mail correspondences evidencing support received from BGIL in relation to WTfPage 582 to 587 of Volume VB of the Paperbook) d. E-mail correspondences evidencing support received from BGIL in relation to profit and loss account and balance sheet analysisffoge 588 to 588 of Volume VB of the Paperbook e. E-mail correspondences evidencing support received from BGIL in relation to legal matters, SAP support etc. Quarter review of user access summary along with SAP Role assignment forms in respect of employees(Page 533 to 562 of Volume VB of the Paperbook) f. E-mail correspondence evidencing support received from BGIL packaging supplementary information.(Page 591 to 562 of Volume VB of the Paperbook) g. The allocation of the technology expenses have been made on cost to cost basis. Evidence that allocation is on cost to cost is in form of Global Cost Allocation Policy (Pages 773 to 788 of Volume IV of Paperback) certified by Price Waterhouse Coopers vide their report. (Pages 789 to 826 of Volume IV of Paperbook)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 h. In addition, report of the independent consultant certifying the cost allocation methodology for the year 2009 is also provided. (Pages 773 to 853of Volume IV of Paperbook) III, Additional evidence filed before Ld. DRP on November?, 2014 Human Resources -i * a) A slide deck prepared by BGIL on 360° feedback tool which provides a framework for behaviours critical to excellence offering depth and level of guidance sought, (Page 1 , to 5 of Volume 3 of the Additional evidence paper book) b) Guidelines prepared by BGIL on 360 Feedback tool are intended to support HR Managers and Advisors in understanding the 360 process in BG Group and their role as trained 360 HR Coaches. These guidelines are to ensure that a minimum standard is adopted and maintained across the Group in the feedback and support Participants receive from the HR Coach in completing their 360 review. It is the first time BG has introduced a 360 tool at group level in year 2009.(Page 6 to 11 of Volume 3 of the Additional evidence paper book) c) A slide deck of BGIL dated October 2009 on Awareness Training for Mentors & Mentees containing an agenda of safety moments, role of mentor, developmental approach to mentoring, role of a mentee, ground rules for mentoring relationship, etc.fPage 12 to 33 of Volume 3 of the Additional evidence paper book) d) A slide deck on People Agenda update for year 2009 which refers activities in relation to performance management, reward, talent management, On-line ADR, etc.fPage 34 to 50 of Volume 3 of the Additional evidence paper book) e) A planning document on BG Group Relatives Response Plan December 2009 which describes how BG Group manages enquiries from relatives of BG people in an incident. It explains the context of BG Group's Crisis Management system. It f) describes the organization, processes, roles and responsibilities of the Relatives Response Team (RRT).(Page 51 to 56 of Volume 3 of the Additional evidence paper book) ' '..... , g) A functional career ladder or a Job description responsibility matrix in relation to HSSE management, finance & planning, global IT&T and HR which summarizes position / designation, requisite skill set required, key accountability etc. Poge 57 to 60 of Volume 3 of the Additional evidence paperbook) h) Sample copies of Inter Company Debit Notes raised by BG1L on BGEPIL which provides details of cost recharged in relation to HR activities (Page 61 to 71 of Volume 3 of the Additional evidence paperbook) h) A manual in relation to Business Travel DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 and Expenses Standard which is governed by BG Group's Human Resources Policy and sets mandatory requirements regarding undertaking business travel on behalf of BG Group and the claiming of expenses associated with business travel and other business activities (Poge 72 to 95 of Volume 3 of the Additional evidence paperbook) i) A sample HR Induction Checklist prepared by BG group for new starters / new employeesfPoge 96 to 98 of Volume 3 of the Additional evidence paperbook) j) A slide depicting list of SAP HR Super Users among the group entities (Page 99 to 99 of Volume 3 of the Additional evidence paperbook) k) Snapshots of portal which provides access to various websites, documents, manuals, standards etc. which are provided below^Poge 100 to 118 of Volume 3 of the Additional evidence paperbook) a. Access to learning management system b. Portal which provides information / role in relation to BG group employee c. behaviors I c. Portal related to BG group and talent management d. Assistance from BGIL in relation to Travel related queries e. Access to BG portal which provides various services d. Information related to Annual incentive scheme provided to BG group employees g. Information related to HR functions h. Information related to organizational functions i. Information & assistance related to travel related documentations Accounting. Finance. Taxation & Legal support a) A report prepared by BGIL on capital expenditure which provides detailed process transaction flow, identify financial reporting risks inherent in the process, and the related control objectives. It also helps identify the controls in operation, and map these to the control objectives identified. It demonstrates how the controls address the relevant assertions for the material financial statement balances affected by this process. It also helps identify the method of monitoring and nature of evidence b) required to confirm operation of controls. (Page 119 to 133 of Volume 3 of the Additional evidence paperbook) c) A manual / reference note for the year 2009 prepared by BGIL which helps the Regional Investment Committee to approve ordinary Course business expenditure on capital projects and financial commitments for the Region, the substitution capital funding within the Region's current approved budget for new projects, Re-approving capital investments, Approve pre- sanction capital expenditure incurred in year of sanction, DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 Approve physical energy commodity sales and purchase agreements (including associated transportation / regasification capacity and trading activities), etc.fPage 134 to 138 of Volume 3 of the Additional evidence paperbook) d) A slide deck prepared by BGIL dated May 2009 which summarizes process improvements and overview of benchmarking of financial shared services etc.(Page 139 to 151 of Volume 3 of the Additional evidence paperbook) ,.--.. ^ -- -..->- > e) A slide deck dated May 2009 prepare by BGIL which provides a guidance towards cost control, cost management, G&A management, travel saving strategy, cost reduction etc.(Page 152 to 189 of Volume 3 of the Additional evidence paperbook) f) Copies of BG group finance newsletter for Quarter 1, 3 & 4 of 2009 which provides various useful guidelines in relation to finance. It also provides updates on the happening of events at various group entities and keep the group updated on the financial frontpage 190 to 236 of Volume 3 of the Additional evidence paperbook) g) A slide deck dated May 2009 prepared for a workshop in relation to cost recovery for virtual conference undertaken by &G\L(Page 237 to 242 of Volume 3 of the Additional evidence paperbook) h) A slide deck prepared by BGIL which provides the group entities with a training guidelines to extract various reports from SAP. (Page 243 to 245 of Volume 3 of the Additional evidence paperbook) i) A functional career ladder or a Job description responsibility matrix in relation to taxation which summarizes position / designation, requisite skill set required, key accountability etc. (Page 246 to 246 of Volume 3 of the Additional evidence paperbook) , . , . j) A slide deck prepared by BGIL to train the group entities on sources of employment law, vicarious liability, contract of employment, various litigation & laws. (Page 247 to 283 of Volumes of the Additional evidence paperbook) ; Insurance related support services and other miscellaneous support services a. A slide deck dated November 2009 on travel insurance policies which provides guidelines on applicable insurance policies for eligible employees.(Page 284 to 292 of Volume 3 of the Additional evidence paperbook) b. A guideline dated December 2009 which establishes BG Group insurance philosophy and responsibilities which applies to all DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 locations of BG Group including BGEPIL-fPoge 293 to 305 of Volume 3 of the Additional evidence paperbook) c. A guideline dated December 2009 which confirms the procedure adopted by the BG d. Group Insurance Team for the appointment of a project-specific insurance broker leading to the purchase of insurance and servicing of the insurance needs, including claims {1MB - claims handling may be subject to separate contract). The document also addresses the procedure adopted for the relatively limited direct approaches made to insurers without the use of brokers.(Page 306 to 311 of Volume 3 of the Additional evidence paperbook) \ e. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to renewal of various insurance coveragesfPoge 312 to f. 364 of Volume 3 of the Additional evidence paperbook) g. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to renewal premium calculation for 2010 BGEPIL (Poge 365 to 367 of Volume 3 of the Additional evidence paperbook) h. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to forecast guidelines on insurance assumptionsfPoge 36S to 371 of Volume 3 of the Additional evidence paperbook) i. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to BGEPIL - operational insurance renewal 2009/lOfPoge 372 to 372 of Volume 3 of the Additional evidence paperbook) . .. j. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to renewal of various insurance coveragesfPoge 373 to 374 of Volume 3 of the Additional evidence paperbook) k. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to renewal of insurance 2010fPoge 375 to 377 of Volume 3 of the Additional evidence paperbook} l. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to premium paid inclusive of tax(Poge 378 to 378 of Volume 3 of the Additional evidence paperbook) m. E-mail correspondences evidencing support received from BGIL in relation to insurance issues pertaining to a potential leak which has been detected from BG HSSE report and whether any DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 advice to insurers is required for the same. (Page 379 to 379 of Volume 3 of the Additional evidence paperbook} n. A functional career ladder or a Job description responsibility matrix in relation to insurance which summarizes position / designation, requisite skill set required, key accountability etc. (Page 380 to 380 of Volume 3 of the Additional evidence paperbook} o. Terms of Personal Accident Insurance Scheme provided to BG group employees which mentions benefit for employees, non- employees, guidance for claims, exclusions if any, etc.(Page 381 to 382 of Volume 3 of the Additional evidence paperbook) p. Sample copy of Inter Company Debit Notes raised by BGIL on BGEPIL in relation to miscellaneous expenses which summarizes various activities undertaken by BGIL for which cost is charged. (Page 383 to 417 of Volume 3 of the Additional evidence paperbook) IV. Benefits derived Support on deployment of globally mobile expatriate staff :  Assessee leverages on the services of BGIL's HR team for obtaining staffing resource and expertise of the wider group thereby saving on the recruitment costs including fees payable to search firms and head hunters.  Assessee's staff participates in group wide compensation initiatives thereby enabling assessee to be incentive better and on a more cost efficient basis (as the assessee need not investigate and implement its own separately designed compensation and rewards schemes)  Capability building of the assessee's workforce by managing their international movement to other business units within BG group, Accounting and Taxation Support • Financial systems and analysis - Consistency of reporting and security of data of the assesse. Received training and other advice on the use of SAP and other financial systems. Financial technical accounting and assurance support *  Assessee being a project office of a foreign company is required to follow international accounting standards.  Assessee's personnel are trained to keep pace with the recent developments in the international arena.  Technical accounting issues of the assessee are resolved by BGIL DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 Financial Reporting : • Savings in time and cost by using a shared overall group finance reporting system. Management reporting • Savings in time and cost. ! Assistance on local taxation issues • Ongoing assistance on international taxation matters and update on developments in the international arena (extremely crucial for the assessee since it is a project office of the foreign entity in India). Insurance Support • Central insurance management team manages insurance for the group as a whole thereby reducing the overall risk and costs and enjoying economies of scale • Removes necessity to employ a full time insurance specialist - reduction in downtime and idle time cost. • Access to more experienced and skilled insurance specialist D. FEDERAL GREEN RECHARGE Description of services received The Assessee is provided with guidelines in relation to best practices, E&A Budget management E&A Budget planning, Peer networks, Parenting & resourcing, trainings etc. in relation to exploration, developments, operations, Health Safety Security Environment ('HSSE'), projects etc. to ensure smooth and efficient functioning. The aforesaid services are also in relation to development of C&P infrastructure C&P Systems Strategy, Contractor relationship management, Market intelligence, Procon-Enhancement, SAP Wave, parenting, and project management etc. Various assets (including the Assessee) agree to participate in common Federal Green Projects on issues that affect them on a common basis so that the project studies can serve as valuable inputs in their exploration and production efforts. Whenever, the studies are commissioned by various assets, the costs are shared between them and whenever the study or project is commissioned only by the Assessee, the charges are based on number of hours spent by the experts of the associated enterprise. II. Evidence filed before the TPO (forming part of paper-book filed with Form 35A on May 6,2014 DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 (a) BG Group HSSE Incident Review Panel Report summarizing performance analysis (Page 75to 75of Volume VA of Paperbook) (b) A report on Asset integrity Programme by the Offshore Division of HSE's Hazardous Installations Division (Page 76 to 147 of Volume VA of Paperbook) (c) Powerpoint presentation summarizing the Egyptian LNG's Asset Integrity Journey of ExcellencefPoge 148 to 152 of Volume VA ofPaperbook) (d) HSSE Incident review report for the month of June 2QQB(Pages 153to 181of Volume VA ofPaperbook (e) HSSE report for all the four quarters of FY 2QQ9-lQ(Page 182 to 228 of Volume VA of Paperbook) _ (f) The allocation of the technology expenses have been made on cost to cost basis. Evidence that allocation is on cost to cost is in form of Global Cost Allocation Policy (Pages 773to 788of Volume IV ofPaperbook) certified by Price Waterhouse Coopers vide their report. (Pages 789to 826of Volume IV of Paperbook) (g) In addition, report of the independent consultant certifying the cost allocation methodology for the year 2009 is also provided. (Pages 773 to 853of Volume IV of Paperbook) (h) Intercompany debit notes with details of time writing i.e. names of such people and hours booked by them (Pages 3 to 48 of Volume VII ofPaperbook) I. III. Additional evidence filed before Ld. DRP onNovember 7, 2014 (a) Detailed description of the activities undertaken for federal recharge (Page 1 to 7 of Volume 4 of the Additional evidence Paperbook) (b) A standard guidance note issued on December 2009 in relation to Floating Production, Storage and Offloading Systems (FLNG)which sets out mandatory Company requirements for the design and construction of monohull (ship-shaped) new build FLNG Facilities worldwide. (Page 8 to 63 of Volume 4 of the Additional evidence Paperbook) (c) Guideline issued on July 2009 on Material Selection & Corrosion Controlwhich defines the minimum Company requirements for selecting materials of construction and corrosion control measures to support the corrosion management strategy for a DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 facilityfPage 64 to 127 of Volume 4 of the Additional evidence Paperbook) (d) A guideline issued on July 2009 on Fabrication of Equipment and Piping which defines minimum Company requirements for the fabrication, joining, inspection and testing of metallic and non- metallic structures (including offshore jackets, trestles etc.), static equipment (including pressure vessels, tanks, boilers, furnaces, sub-sea manifolds, machinery and valve casings), piping systems and pipelines (including flow lines, trunk lines and r\sers)(Page 128 to 171 of Volume 4 of the Additional evidence Paperbook) (e) A guidance note issued on February 2010 prepared by BGIL to define BG's operating policy and procedures for the safe isolation, and reVasftateica&icvt o£ <^las\*.<vt ^i>jpw^\ from sources of hydrocarbons and other fluids.This document applies to the preparation for mechanical isolation, reinstatement and leak testing of process utility and drilling systems. It should be followed at all BG operated sites, both onshore and offshore, and applies to all process systems including subsea pipelines.f^oge 172 to 226 of Volume 4 of the Additional evidence Paperbook) (f) A handbook issued on February 2010 by BGIL on operation guideline on Safe Isolation and Reinstatement of Plant which forms part of the BG Group operations requirements for all global assets.(Page 227 to 299 of Volume 4 of the Additional evidence Paperbook) (g) A slide deck issued on December 2009 prepared by BGIL on project & well accounting wherein the overview and statistics of BG group assets including BGEPIL capex framework, key projects & plans, project accountant role, interaction with PMT & well engineers, well reconciliation, reports etc. are summarized.(Page 300 to 347 of Volume 4 of the Additional evidence Paperbook). (h) A graphical chart summarizing BG Group Finance HSSE Schedule for 2009 which summarizing various fedgreen activities during the period/Page 348 to 348 of Volume 4 of the Additional evidence Paperbook) . (i) Snapshots of access to intranet portal as well as information in relation to following Fedgreen activitiesfPage 349 to 356 of Volume 4 of the Additional evidence Paperbook)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 a. HSSE b. Health risk management . c. Exploration activity d. Development activity e. Policies f. Group operating mode g. Asset integrity h. Contracts & Procurement activity i. Production & operations activity j. Corporate reserves etc. (j) A graphical representation of combined operations safety case prepared by BG International Armada Development which gives guidelines of operation safety case which can be undertaken by other group entities. Page 357 to 361 of Volume 4 of the Additional evidence Paperbook) (k) A guidance note issued by BGIL for effective environmental management which delivers and protects business value throughout the lifecycle of an asset and reduces to as low as practicable impacts and risks related to the natural environment. CPage 362 to 411 of Volume 4 of the Additional evidence Paperbook) • ' (I) A guideline issued by BGIL on The Safety Case, which is the means of both ensuring and demonstrating that suitable and sufficient measures are in place to prevent a major accident or environmental event, and to reduce the effects of these events should they occur. fPage 412 to 449 of Volume 4 of the Additional evidence Paperbook) (m) A document of BGIL which provides the definition and guidance on the layout & content of a Safety Case for Combined Offshore Operations. It enables such Safety Cases to be prepared consistent with the requirements of the BG Group Standard.(Page 451 to 482 of Volume 4 of the Additional evidence Paperbook) (n) A standard issued by BGIL on incident reporting and investigation which sets out procedures for establishing reporting and investigation processes, reporting and investigation of incidents and subsequent learning from incidents. Page 483 to 490 of Volume 4 of the Additional evidence Paperbook)

IV. Benefits derived DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 The aforesaid services provide the Assessee with access to ever-evolving technical standards and guidelines that helps in achieving higher level of efficiency and safety. This leads to improvement in processes by gaining access to workflow manuals. The direct benefits are as below: a) Improved processes / functional management systems etc. ' • • b) Development and sustaining networks amongst functional peer groups. Undertaking functional conferences, technical workshops, teleconferences etc. Support in technical problem solving. , ! ; ' ' '• c) Developing & delivering technical and functional training. d) Support in relation to development of governance and assurance principles. e) Reduction in exposure to potential major incident due to integrity failure f) Reduced risks of damage, loss of production or loss of revenue g) Reduced risks to the environment etc.

E. MANAGEMENT AND UNIT RECHARGES - TECHNOLOGY RECHARGE I. Description of services received Represents costs incurred by BGIL to run technology programmes for identification, development and implementation of new and enhanced techniques to the existing exploration and production operations in order to address the technological challenges faced by the assessee in following areas: - Structural geology - Well Engineering - Productions Operations technology - Borehole geophysics - Geology Technology management - Geophysics technology watch I management - Petro physics technology program - Transmission and distribution - Commercial ; DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 In relation to Structural Geology and petro physics technology program, BGIL financially supports research activities conducted by various independent third party universities and organizations. II. Evidence filed before the TPO (forming part of paper- book filed with Form 35A on May 6,2014) - (a) Manual describing the technology programmes proposed to be undertaken by BGIL which evidences the activities that has been undertaken, the cost involved, the benefits derived by the BsselsfPages 268 to 534 of Volume VA of Paperbook) (b) Technology bulletin for group technology strategyfPoges 237 to 265 of Volume VA of, Paperbook) (c) Snapshots of various portals in relation to Technology recharge (Pages 230 to 236 of Volume VA ofPaperbook) (i) T he allocation of the technology expenses have been made on cost to cost basis. Evidence that allocation is on cost to cost is in form of Global Cost Allocation Policy (Pages 773 to 788 of Volume IV of Paperbook) certified by Price Waterhouse Coopers vide their report. (Pages 789 to 826 of Volume IV of Paperbook) (d) In addition, report of the independent consultant certifying the cost allocation methodology for the year 2009 is also provided. (Pages 853 to 297 of Volume IV of Paperbook) ; : III. Additional evidence filed before Ld. DRP onlMovember 7, 2014 (a) A report of BGIL on 2009 Technology Program to identify, develop and implement new and enhanced techniques and capabilities to the benefit of BG asset challenges.{Page 1 to 54 of Volume 5 of the Additional evidence Paperbook) (b) A document of BGIL on 2009 Technology Program which provides various project definitions on projects such as Geology, Geophysics, Petrophysics, Reservoir Engineering, etc.fPage 55 to 124 of Volume 5 of the Additional evidence Paperbook) (c) A manual issued on June 2009 on Data Room Visit Guideline issued by BGIL which provides guidelines/checklists for key disciplines involved in the evaluation of data provided in a 'dataroom'. The dataroom is a key opportunity to assist BG in the evaluation of an opportunity and in order to manage the risks associated with a business decision.(Page 125 to 152 of Volume 5 of the Additional evidence Paperbook)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 (d) A guideline issued on July 2009 on Metering issued by BGIL which provides guidance and instruction which outlines best practice approaches to be followed when providing new metering or measurement systems or upgrading existing systems.fPage 153 to of Volume 187 of the Additional evidence Paperbook) (e) A guideline issued on Oct 2009 on Human Machine Interfaces issued by BGIL which displays need to be at their most effective during abnormal operation when the operator is under most stress, and the consequences of error are highest. This document provides best practice guidance in the design of operator interfaces.(PcrSfe 188 to 214 of Volume 5 of the Additional evidence Paperbook} (f) A guideline issued on July 2009 on Hot Tapping on Pipelines, Piping and Associated Equipment issued by BGIL which defines the minimum Company requirements for safe hot tapping operations.(Page 215 to 236 of Volume 5 of the Additional evidence Paperbook} (g) A guideline issued on December 2009 on Engineering Technical Standard - Relief, Blcwdown& Flaring issued by BGIL which sets out mandatory Company requirements for the design of relief, blowdown and flaring facilities for offshore and onshore assets for both new "green field" developments and "brown field" modifications.(Page 237 to 259 of Volume 5 of the Additional evidence Paperbook) (h) A guideline issued on Aug 2009 on Supply Base issued by BGIL which captures the first draft in providing guidelines for Supply Base infrastructure development, management and operation.(Page 260 to 336 of Volume 5 of the Additional evidence Paperbook) (i) A guideline issued on December 2009 on Application of Process Isolations issued by BGIL which is provided to controls and procedures where Process Isolations are undertaken and will be used as the basis of any assessment or assurance activity relating to its subject matter.fPoge 337 to 356 of Volume 5 of the Additional evidence Paperbook) (j) A guideline issued on July 2009 on Field Development Engineering prepared by BGIL which presents a philosophy for Development Engineering and provides guidance for integrating Development and Engineering work streams in order that robust concepts are produced.(Page 357 to 392 of Volume 5 of the Additional evidence Paperbook)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 (k) Snapshots of access to intranet portal as well as information in relation to Technology recharge activities which are provided belowfPage 393 to 399 of Volume 5 of the Additional evidence Paperbook): a. Policy b. Engineering activities c. Group well risk management activities (l) A guideline issued on Aug 2009 on Temporary Repair of Piping Systems issued by BGIL which is intended to provide guidance on the different types of temporary repairs/joints that are to be utilised during an unplanned repair to a process or utility system.(Page 400 to 419 of Volume 5 of the Additional evidence Paperbook) (m) ICDNs with details of nature of expenses and the costs associated under each such expense head.(Page 420 to 431 of Volume 5 of the Additional evidence Paperbook} F. PAYROLL EXPENSES I. Description of services received i BGIL has deputed its employees to the various projects of the assessee in India. The said employees have, however, worked under the direct control and supervision of the assessee. BGIL has not rendered any other service to the assessee in this regard except facilitating the payment of salary to its above employees. The assessee has reimbursed the salary of such personnel to BGIL on a cost-to-cost basis. II. Evidence filed before the TPO (forming part of paper- book filed with Form 35A on May 6, 2014 a) Worksheet containing names and job responsibilities of the expatriates seconded to BGEPIL (Page 3 of Volume III of the Paperbook) b) Sample copies of tax returns filed by the employeesfPcrge 4 to 267 of Volume III of the Paperbook) c) Sample copies of debit notes raised by BGIL on the assessee, etc. (Page 268 to 291 of Volume III of the Paperbook) d) Letters of secondment issued by BGIL (Page 292to 309 of Volume III of the Paperbook)

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 4.6 From the above evidence, DRP is of the view that the assessee has established the fact that it has rprpivpdthp_5en/icp<: and it is a useful service which it has received. The next question before the DRP is whether assessee had to establish the arm's length nature of each and every transaction separately or it was available to the assessee to club the transaction together. DRP has considered this issue of separate benchmarking nf thp international transactipn carefully. The Income Tax Act and Rules provide for clubbing of transactions when a class of transactions are involved. The relevant part of the Section/ Rule is reproduced below: Section 92C. (1) The arm's length price in relation to an international transaction —[or specified domestic transaction] shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe—, namely :—....... Rule 10C. (1) For the purposes of sub-section (1) of section 92C, the most appropriate method shall be the method which is best suited to the facts and circumstances of each particular international transaction, and which provides the most reliable measure of an arm's length price in relation to the international transaction. (2) In selecting the most appropriate method as specified in sub- rule (1), the following factors shall be taken into account namely:— •,+.' . . : " (a) the nature and class of the international transaction; Rule 10D. (1) Every person who has entered into an international transaction shall keep and maintain the following information and documents, namely:— (d) he nature and terms (including prices) of international transactions entered into with each associated enterprise, details of property transferred or services provided and the quantum and the value of each such transaction or class of such transaction: (/) a description of the methods considered for determining the arm's length price in relation to each international transaction or class of transaction, the method selected as the most appropriate method along with explanations as to why such method was so selected, and how such method was applied in each case; DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 From the reading of the above Section/ Rules, it is clear that when the transactions are closely interrelated, it is but natural to club such transactions and benchmark it together. The justification given by the assessee in this regard is worth considering. "The international transactions pertaining to intra-group services received by the assessee (i.e. MSU charges, including federal green and technology recharge, G&A charges, IM and other time writing services, personnel services and joint acquisition and development of IT infrastructure and software} have been aggregated and benchmarked on a whole entity level using Transactional Net Margin Method (TNMM'), since such transactions are closely linked to the main business activity of the assessee of exploration and production of oil and gas. Further, Para 4.2.1 of the TP study report (Page 268 to 269 of Volume II of Paperbook) specifically provides the reasons for rejection of the other four methods. Specific reasons recorded for rejection of the CUP method are summarized below: • The assessee receives services from its AE and does not receive the same services directly from any unrelated parties in India or overseas; • The AE does not provide such services to any unrelated party in India; and • No public information is available with regard to the price paid for similar services, as would be rendered between unrelated parties. Considering the functional and risk profile of the intra-group services received and the availability and reliability of comparable data, TNMM using Net Operating Profit Margin on sales ('NPM') as the profit level indicator, was selected to be the most appropriate method. A search for broadly comparable companies that perform similar functions and carry risk profile similar to that of assessee in respect of its oil and gas exploration and production function was conducted. The search process yielded a set of 9 companies that are broadly comparable to the functional profile of assessee's oil and gas exploration and production activities. For the year ended 31st March 2010, the assessee has earned an NPM of 48.71 percent with respect its oil and gas exploration DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 and production activities. The NPM earned by assessee being higher than the average NPM of comparable companies, it has been concluded that the assessee's international transaction of receipt of intra-group services from its AE, is on an arm's length basis. Further, in support of its claim that the intra-group services received from its AE are 'closely' linked to the main business activity of the company i.e. exploration and extraction of oil and gas, the assessee also placed reliance upon the US regulations, OECD regulations and OECD Draft Notes on Comparability (Submission dated 9th January 2014}" In view of the above, DRP holds that TNMM was the most appropriate method in this case and assessee was justified in obtaining the services as mentioned in the earlier paragraphs. Therefore, DRP holds that the deterioration of arm's length price by the TPO in the intra group services to the tune of Rs. 332,97,66,244/- is erroneous and deserves to be deleted.‖ [extracted from the directions of DRP 9 tables excluded]

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 9. Ground No. 4 of the appeal of the revenue is against the direction of the Ld. Dispute Resolution Panel to restrict the proposed adjustment to Rs. 1461247/- instead of Rs. 2258422/– on account of loan transaction between the assessee and M/S BG Asia-Pacific holding Ltd. The brief facts of the case stated in Para No. 9 of the order of the Ld. Transfer Pricing Officer wherein a demand of Rs. 18067380/– was raised on BG Asia-Pacific holding Ltd for assessment year 2004 – 05 vide order under section 143 (1) of the income tax act, which was adjusted against the refund of Rs. 18067380/– due to the assessee for assessment year 2005 – 06. Subsequently the case of BG Asia-Pacific holding Ltd was selected for scrutiny and assessment was completed under section 143 (3) of the income tax act and the credit of tax paid was given to the assessee, resulting into nil tax demand. The BG Asia- Pacific holding Ltd preferred an appeal before the Ld. CIT (A) who directed that the interest be calculated and thus the assessment was revised under section 251 of the income tax act, resulting into a refund of Rs. 18067380/– which was adjusted earlier. Subsequently, the revenue refunded the sum of Rs. 18067380/– back to the BG Asia-Pacific holding Ltd along with interest of Rs. 1461247/- amounting in all to Rs. 19528627/–. Rs 18067380/- was recovered by the assessee from BG Asia-Pacific holding Ltd which was earlier adjusted from the refund of the assessee. Therefore apparently assessee received back Rs 18067380/-. The Ld. Transfer Pricing Officer noted that though the sum was recovered by revenue from the refund due to the assessee , it is akin to loan given by the assessee to BG Asia-Pacific Ltd, which was subsequently refunded with interest to BG Asia-Pacific by the revenue. Therefore, the Ld. Transfer Pricing Officer held that interest @ 12.5% amounting to Rs. 2258422/– shall be charged which is the return an independent entity would expect on money given as loan. Therefore Ld. Transfer Pricing Officer proposed an adjustment of Rs. 2258422/–. Assessee preferred objections before the Ld. Dispute Resolution Panel, vide Para No. 8.3 of the direction, the Ld. Transfer Pricing Officer was directed to restrict the DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 addition to Rs. 1461247/– which is actual interest allowed by revenue to BG Asia-Pacific Ltd.. Against this direction, the revenue is in appeal.

(v)"transaction" includes an arrangement, understanding or action in concert,-- (A) whether or not such arrangement, understanding or action is formal or in writing ; or (B) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceeding. From the above definition, it is clear that if two parties are acting in concert then it can be said that they have entered into a „transaction‟. The persons can be said to be „acting in concert‟ if there is an element of cooperation which can be extended in many ways directly or indirectly through an agreement, formal or informal. Further, the persons by virtue of their business relations can also be said to be „person acting in concert‟. If that be not so then it would be the duty of the parties to demonstrate it that they are not acting in concert. In the present case, the tax demand with respect to associated enterprise has been recovered from the assessee by adjusting the DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 refund due to the assessee against the tax demand of the associated enterprise by the revenue. It is not known whether the adjustments were made with the consent of the assessee whose case the refund is due. Even if there is no consent taken from the assessee then if the assessee is aggrieved by that action then it can always agitate this issue before the higher authorities. In the present case even after the adjustment of the refund due to the assessee no evidences have been placed before us that assessee objected it before higher authorities and also undertook any remedial measures in obtaining the alleged forceful refund recovered. If the assessee remains in inaction , it tantamount as consent of the assessee. No such correspondence / communication objecting to such adjustment was produced before us. Further, in the present case both, the parties have common business interest and in the above transaction, there is an element of cooperation, which is evident from assessee not objecting to adjustment of its refund. In view of this it satisfies all the conditions of definition of a „transaction‟ as provided under section 92F (v) of the act. Further, it may be a transaction but if it is not an international transaction within the meaning of the provisions of section 92B of the act, the arms length price of it is not required to be determined. Therefore, it is imperative to examine whether it satisfies the conditions laid down under that section. According to section 92B, lending or borrowing of money between two or more associated enterprises means an international transaction. In the present case, the assessee has lent money to the associated enterprises by liquidating its asset of „refund due‟ for repayment of the tax dues of associated enterprise. In view of this, money has been lent by the assessee to the associated enterprises hence it satisfies the basic condition laid down under section 92B (1) of the act. Even otherwise it is also included in clause (i) ( c ) of the explanation to section 92B of the act as it is a transaction akin to „capital financing‟ in the form of „advance‟ to the associated enterprise by the assessee. Therefore, in our opinion the above transaction is an „international transaction‟ within the DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 meaning of section 92B of the income tax act. Now after holding, so it would be mandatory to compute the arm‟s length price of the above transaction by applying one of the methods of determination as per the provisions of section 92C of the income tax act. In the present case the Ld. assessing officer has assumed the rate of interest @ 12.5 % without any basis but merely on assumptions and presumptions. Furthermore the Ld. Dispute Resolution Panel has also held that the refund amount of the assessee was wrongly adjusted and only actual amount of interest received from the Department by the associated enterprise shall be retained as an addition. We also do not approve the finding of the Ld. Dispute Resolution Panel and we failed to understand what relationship the amount of interest on refund received by the associated enterprise have with the amount of arms length price of the interest on loans given by the assessee to the associated enterprise. In fact the interest on refund given by the revenue to the AE is statutory interest rates, which cannot be used for benchmarking of loan between two business concerns. In view of this we set aside this ground of appeal of the revenue back to the file of the Ld. Transfer Pricing Officer to determine arm‟s length price of interest in one of the prescribed method and in accordance with the provisions of section 92C of the income tax act. Further we have perused the decisions relied upon by the Ld. authorized representative stating that there is no international transaction in absence of existence of some tangible material. As we have already held that in the present case the parties are acting in concert with its associated enterprise and there is a liquidation of the assets of the assessee for paying the tax liability of the associated enterprise we do not find those decisions can be applied to the facts of this case. In view of this ground No. 4 of the appeal of the revenue is allowed with above direction.

13. Ground No. 5 of the appeal of the revenue is against the direction of the Ld. Dispute Resolution Panel in dropping the proposed addition of Rs. 3959606/- DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 on account of expenses claimed to have been incurred in relation to club entrance and subscription fees for the employees of the company.

14. Both the parties submitted that that the issue is identical to ground No. 5 of the appeal of the revenue in for assessment year 2010 - 2011, the reasons given by the lower authorities, and the arguments of the both the parties also remains the same.

15. We have carefully considered the rival contention and also perused the relevant material available before us and we are of the view that issue is identical to ground No. 5 of the appeal of the revenue for assessment year 2010 – 2011 wherein we have held that the Ld. Dispute Resolution Panel has correctly directed the Ld. assessing officer to delete the disallowance was respect to the club expenditure. For the same reasons and on the same logic we also hold that Ld. Dispute Resolution Panel has correctly directed the Ld. Transfer Pricing Officer/Ld. assessing officer to delete the disallowance with respect to the club expenditure amounting to Rs. 3959606/–. In the result ground No. 5 of the appeal of the revenue is dismissed.

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 503071917/–. On payment of such sum the assessee claimed it as a deduction which was disallowed by the Ld. assessing officer holding that the appellant is not eligible to claim the aforesaid deduction as the appellant had not commenced production during the relevant year in terms of the provisions of section 42 of the act. The Ld. Dispute Resolution Panel upheld the contention of the Ld. assessing officer. Before the Ld. Dispute Resolution Panel the assessee submitted an alternative argument that the expenditure should be allowed as deduction in the financial year 2011 – 12, being the year in which the expenditure became infructuous. On this argument, the Ld. Dispute Resolution Panel stated that admittedly, the expenditure became infructuous in the financial year 2011 – 12, being the year in which the area was surrendered prior to commercial production. Therefore, no claim can be allowed in this year. Regarding the alternative claim of the assessee that the Ld. assessing officer may be directed to allow the said expenditure as deduction in the year in which became infructuous, It was held that it does not have jurisdiction to issue any such direction as Ld. Dispute Resolution Panel is authorized to give direction to the assessing officer with reference to the additions proposed in the draft assessment order against which the objections have been filed and not for any future assessment.

DDIT V B G Exploration & Production India Limited CO 13/Del/2015 A Y 2009-10 i) CIT vs. Vardhman Spinning and General Mills : 176 Taxman 157 (P&H) ii) Indo Rama Synthetics Ltd.: 333 ITR 18 (Del.) iii) CIT v. Priya Village Roadshows Ltd.: 332 ITR 594 (Del.) iv) CIT v. Euro India Ltd.: [2014] 223 Taxman 97 (Del.) v) Hindustan Aluminium Corporation Ltd. vs. CIT: 159 ITR 673 (Cal.) vi) Asiatic Oxygen Ltd. vs. CIT (Cal.) vii) CIT vs. Graphite India Ltd.: 221 ITR 420 (Cal.) viii) Binani Cement Ltd. v. CIT: 277 CTR 49 (Cal.) ix) DCIT v. Gujarat Narmada Valley Fertilizers Co. Ltd.: 57 taxmann.com (Guj.) 20. Without prejudice, the appellant respectfully submits that the AO should have stated that the expenditure of Rs. 50,30,71,917 should be allowed as a deduction in the financial year 2011-12 viz. being the year in which the expenditure became infructuous (i.e. in the year in which the area was surrendered prior to commercial production). Accordingly, in terms of section 42 of the Act, the appellant requests to direct the AO to allow the said expenditure as a deduction in the financial year 2011-12, the year in which the aforesaid expenditure became infructuous.