Capital Gain on sale house property

Yes.. if designing and furnishing was happened on or after 1-4-2001..

Designing and furnishing does not constitute part of cost of house.
So such should be excluded from the same.

Why such works will not be considered as improvement work as furnishings adds to the value of property...

It is cost of acquisition if expenses were incurred at the time of purchase.
it will be cost of improvement, if furnishing expenses incurred at later stage.
But in both cases, u will get benefit of indexation

It's considered as cost of improvement and Deduction is available from sale consideration as time of sale as Cost of Improvement.
Indexation is also available from the year in which such improvement was done.

The expenses on Interior Decoration & Furnishings (ID&F) are incurred after purchasing the property and hence cannot be considered as cost of acquisition. For being considered as cost of improvement, the expenses have to be of such a nature that makes the house habitable for e.g. fixing of broken doors, repairing of electrical fittings and plumbings, constructing or reinforcing boundary walls etc. Expenses that result in mere increase in comfort or better look of the house are not taken as cost of improvement for e.g. installing ACs, putting false ceilings, painting or white washing walls.