Imagine buying a bare plot in Bangalore’s Adarsh Palm Retreat way back in 2005 for roughly ₹60–70 lakh (jointly with your spouse). You build a beautiful villa, add solar panels, fancy modular kitchen, built-in wardrobes, ACs fixed into the walls – the works. Fast forward to 2022: you sell the fully done-up villa for ₹8.04 crore (₹4.02 crore each). You pay your capital gains tax honestly, but suddenly the Income Tax department sends you notices saying you owe an extra ₹80+ lakh each – total ₹1.6 crore demand!
That’s exactly what happened to senior citizen NRI couple Vijay and Nisha Israni from Mumbai.
What Did the Income Tax Officer Say “NO” To?
The tax officer rejected three big things the couple had subtracted while calculating profit:
- ₹11.35 lakh extra paid to the builder years ago for plumbing, electrical and civil work
- ₹25.73 lakh spent on solar plant, ACs, modular kitchen, wardrobes, speakers fixed in walls, etc. (called these “personal items”)
- ₹5 lakh spent on flights, Mumbai hotel stay, Bangalore hotel, food, cabs and couriers (said “travel is not allowed”)
Because of this, the taxman added almost ₹85 lakh extra profit in each person’s hands and raised huge demands.
The Couple Fought Back – And Won Big!
Since nobody turned up for hearing at ITAT Bangalore (the couple live abroad), the Tribunal still studied all their papers and gave a blockbuster judgment on 31st October 2025.
What the ITAT Allowed (Massive Relief):
- Full ₹11.35 lakh builder payment → Allowed 100% (They said: builder gave possession letter = proof full money was paid, no need for 15-year-old bank statements)
- Out of ₹25.73 lakh home upgrades: → ₹20.23 lakh fully allowed! Solar panels on roof, ACs fixed in walls, modular kitchen, built-in wardrobes, false ceiling, concealed wiring – all these now officially count as “cost of improvement”. You get indexation benefit on them (huge tax saving). Only ₹5.5 lakh of truly movable items (like a microwave or portable stuff) disallowed.
- The ₹5 lakh travel, hotel and food bill → Completely rejected (ITAT laughed at the ₹64,000 Mumbai hotel bill – “How is staying in Mumbai needed to sell a Bangalore house?”)
How Much Money Did They Actually Save?
Because of indexation on the extra ₹31+ lakh now allowed (₹11.35L + ₹20.23L per person), the couple will save several lakhs each in tax – possibly ₹50–70 lakh combined. The original ₹1.6 crore scare is now history.
What This Means for You (Even If You’re Not an NRI)
If you ever sell a house in India and you have bills for:
- Solar panels
- Fixed ACs
- Modular kitchen & wardrobes
- False ceiling, fancy lighting fixed into walls → Keep those bills safely! You can now subtract them (with inflation benefit) and pay much less tax.
But don’t try claiming your Goa vacation or Uber rides as “sale expense” – ITAT made it clear that won’t fly!
So next time you upgrade your home, remember: those fancy fittings aren’t just making your house beautiful – they’re quietly saving you crores in tax when you sell!
