Sorry for wrong posting earlier. Might be the answer of some other query mixed up here.
1. "Foreign Exchange Asset” is the asset that is purchased with convertible foreign exchange by the NRI
Practically any such investment through NRE account.
Once deposited in ordinary/resident bank account it looses its characteristic of foreign exchange.
2. Yes, ---- While calculating the income from investment, any expenditure or allowance is not allowed as a deduction for a non-resident Indian.
------ if income earned consists of investment income or income by way of long-term capital gains or both (as per sec. 1154D) it is treated as the gross total income and no deductions or allowances are allowed under Chapter VI-A on this income.