NRI travelling to India to sell property can claim flight expenses as tax deduction, rules ITAT

If you are a non-resident Indian (NRI) living abroad and have to fly to India to complete the sale of a property, your airfare could qualify for a tax deduction while calculating capital gains. However, simply travelling to India during the period of a property transaction does not make the entire trip tax-deductible. You must establish that the expenditure was incurred specifically in connection with the sale. The Income Tax Appellate Tribunal (ITAT), Bengaluru bench, has clarified this distinction while hearing an NRI's appeal against the income tax department's decision to disallow Rs 12.01 lakh claimed towards travel and accommodation expenses incurred for selling a house property in India.

The taxpayer, based in the US, had sold a property for Rs 2.63 crore through a sale deed executed on January 6, 2020. While calculating long-term capital gains, he deducted the travel expenses under Section 48(i) of the Income-tax Act, 1961. The assessing officer (AO) rejected the claim, arguing that the expenses were not incurred wholly and exclusively for the property sale. When can NRIs claim flight expenses against capital gains? Under Section 48(i) of the Income-tax Act, 1961, expenditure incurred wholly and exclusively in connection with the transfer of a capital asset can be deducted from the sale consideration while calculating capital gains.