https://www.taxtmi.com/caselaws?id=182474 Expenditure relating to exempt income may be disallowed in principle, with the interest component requiring verification of the nexus between borrowed funds and tax-free investments and the administrative and management expenses confined to 2% of the exempt income. Treaty computation of permanent establishment profits under Article 7(3) permits deduction of business expenses without importing the domestic restriction in section 44C, so the head office expenditure cap under that provision does not apply. The overall position is that exempt-income related disallowance can stand partly, while treaty-based deduction of head office expenses is not limited by section 44C. en-us Wed, 03 Oct 2012 00:00:00 +0530 Mon, 29 Jan 2018 08:40:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=182474 Expenditure relating to exempt income may be disallowed in principle, with the interest component requiring verification of the nexus between borrowed funds and tax-free investments and the administrative and management expenses confined to 2% of the exempt income. Treaty computation of permanent establishment profits under Article 7(3) permits deduction of business expenses without importing the domestic restriction in section 44C, so the head office expenditure cap under that provision does not apply. The overall position is that exempt-income related disallowance can stand partly, while treaty-based deduction of head office expenses is not limited by section 44C. Case-Laws Income Tax Wed, 03 Oct 2012 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=182474