Indian Tribunal Sends NRI’s Airfare Deduction Claim Back for Verification

The Bengaluru ITAT sent an NRI seller’s Rs 12.01 lakh travel and accommodation claim back for fresh verification, rather than approving the full amount. The tribunal said airfare for a trip to register a property sale could qualify, subject to proof.

The case concerned Santanu Arun Nandi, who lived in the United States and sold Indian property for Rs 2.63 crore. He sought to deduct travel costs when calculating capital gains for assessment year 2020-21. The claim was disputed.

The assessing officer rejected the travel expenses. The tribunal returned the matter to the assessing officer to identify eligible costs from the supporting records. It did not set a final deduction.

The ruling was reported on November 4, 2026. It does not automatically cover every journey made during a property sale.

The sale connection decides which travel costs can qualify

Section 48(i) of the Income-tax Act, 1961, allows transfer expenses to reduce sale consideration in computing capital gains when they meet the required direct and exclusive connection to the transfer. The tax department’s capital-gains guidance also addresses tax on property sales. The test is tied to the transaction.

The Bengaluru bench distinguished a trip made for registration from an earlier visit. Nandi had travelled from the United States in November 2019, nearly two months before the sale deed was executed in January 2020. Those expenses could not be treated as connected to that transfer, the tribunal held.

The January journey received different treatment. Nandi submitted flight tickets for travel between Chicago and Delhi, along with a hotel bill for Rs 93,125 for a Bengaluru stay from January 5 to January 8. The tribunal accepted that air travel to India for sale-deed registration could relate to the transfer. Verification was still required.

The booking also covered another family member, so the taxpayer had to establish which costs were exclusively attributable to the property transaction. His stay in India lasted 17 days and included travel between multiple cities, details that called for closer examination of the expenses. A trip’s timing alone does not establish its purpose.

Divya Bhanushali, a chartered accountant and chief product officer at TaxBuddy, said:

“For NRIs, travelling to India to complete a property sale does not automatically make the entire airfare and accommodation expenses deductible. The taxpayer must demonstrate that the expenditure was incurred wholly and exclusively in connection with the transfer. Personal travel, family members' tickets and trips undertaken much before the registration date may not qualify.”

The tribunal’s return of the claim for review leaves the amount eligible for deduction to be determined from the evidence. It did not rule that all airfare or accommodation costs in the Rs 12.01 lakh total qualified.

Keep records that connect each expense to registration

The case points to records that can show why a journey took place and which costs related to the sale. Sellers can keep:

• Flight tickets and hotel invoices, with dates and travel details.
• Sale agreements and registration records showing the transaction timeline.
• Receipts for professional fees linked to the transfer.
• Separate documentation for personal travel and tickets bought for family members.

The Chicago-to-Delhi tickets and Bengaluru hotel bill formed part of the evidence in Nandi’s case. The assessing officer must now verify the supporting documents and determine which expenses meet the statutory test. The tribunal did not prescribe a fixed formula for dividing a mixed-purpose trip.

The tribunal treated acquisition costs separately

The ruling also addressed costs of acquiring the property. Those amounts are distinct from travel expenses claimed in connection with its transfer. The tribunal allowed Rs 21.60 lakh in home-loan interest as part of the acquisition cost and allowed indexation on that amount.

Nandi submitted income-tax return records covering assessment years 2007-08 to 2020-21. They showed the interest had not previously been claimed under Section 24(b), a point relevant to the tribunal’s treatment of the amount. The interest claim was not an airfare deduction.

The tribunal also included a one-time maintenance deposit of Rs 2.29 lakh and electricity and water deposits of Rs 1.71 lakh in the acquisition cost. It noted that the maintenance payment was needed to obtain possession and found no evidence that the deposits had been separately recovered from the buyer.

Sellers calculating gains should keep transaction and travel records with dates, and distinguish personal or family expenses from costs claimed for the sale. The assessing officer’s fresh review will determine what portion of Nandi’s travel claim qualifies.