Meals, Transport & Courier Expenses not Part of “Transfer of House Property”: ITAT Rejects NRI’s Income Tax Deduction Claims [Read Order]

The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT) recently affirmed that expenses for air tickets, meals, local transport, boarding charges and courier as claimed by a non-resident assessee cannot be treated as expenditure “wholly and exclusively in connection with the transfer” of a residential property.

The assessee, Vijay Lakhmichand Israni - a senior citizen and non-resident, jointly owned Villa No. 72, Adarsh Palm Retreat, Bengaluru, with his wife. The property was sold for ₹4.02 crore with the appellant’s share being 50%, and long-term capital gains were declared after claiming cost of acquisition, cost of improvement and transfer-related expenses.

Among the claims, the assessee marked ₹4.99 lakh spent towards travel, meals, costs for boarding, and courier charges, asserting that these were incurred wholly and exclusively in connection with the sale.

During the scrutiny, the Assessing Officer disallowed the claim, noting that the assessee could not establish that the travel between Mumbai and Bengaluru, boarding for a week in Mumbai, meals, local cab charges, or courier fees were incurred exclusively for the transfer of the house property. The AO held that the nature of expenditure was personal and not intrinsically connected to the transfer. This observation was upheld by the Dispute Resolution Panel.

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Aggrieved, the assessee filed an appeal before the ITAT along with statement of facts, grounds of appeal and written submissions. None appeared on behalf of the assessee at the time of hearing. Dr. Divya K.J. appeared for the Revenue and supported the disallowance.

The Bench comprising Vice President Prashant Maharishi and Judicial Member Keshav Dubey examined the assessee’s written submissions and the list of claimed expenses, which included airfare, boarding charges in Mumbai, meal expenses, local transport and courier fees and noted that Section 48(i) of the Income Tax Act requires that such expenditure must be wholly and exclusively connected with the transfer.

ITAT noted that the assessee’s week-long boarding in Mumbai had no link to the transfer of property located in Bengaluru, nor could meals and local transportation be treated as transfer-related expenses. Accordingly, the Tribunal further held that such costs were personal in nature and lacked the direct, intrinsic nexus required by law.

In conclusion, ITAT noted that none of the expenses claimed by the assessee in this regard were indispensable or directly connected to effecting the transfer of the immovable property. Accordingly, the Tribunal upheld the disallowance of ₹4,99,000 and dismissed this ground of the assessee’s appeal.

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