Concessional-rate interest remains taxable rather than exempt...

Concessional-rate interest remains taxable rather than exempt income, so expenditure relating to it is not subject to exempt-income disallowance. Interest between an Indian permanent establishment and its head office or overseas branches is a mutual receipt rather than income; related administrative expenditure is likewise outside that disallowance. Consistent year-end revaluation of outstanding foreign-exchange forward contracts under the mercantile system produces an allowable loss where an existing obligation and reliable estimation exist. Interest disallowance is unwarranted where interest-free own funds exceed exempt-income investments absent a borrowing nexus. Broken-period interest on banking securities and voluntary-retirement expenditure for workforce rationalisation are revenue deductions. Head-office and global-system charges require prior factual classification before withholding or royalty consequences are considered.