JUDGMENT:

S.B. SINHA, J :

1. Leave granted.

2. The Appellant herein is an assessee under the Income Tax Act. It is an HUF. For the assessment year 1998-99, an income of Rs.30,80,030/- was declared by it, inter alia, showing a long term capital loss of Rs.34,12,000/- .The said capital loss was said to have arisen on account of sale of property being land and building known as Jekison Niwas, 220 Walkeshwar Road,Mumbai. Admittedly, the Appellant had 1/4th share therein. It entered intoan agreement for sale of undivided 1/4th share in the said property for a sum of Rs.8 crores with one M/s Layer Exports Pvt. Ltd.. For the purpose of valuation of the said property, one Shri U.D. Chande, a registered valuer,was appointed. On 01.04.1981, the value of the said 1/4th share in the property was determined at Rs. 2,52,00,000/-. In the said valuation report, it was stated that the purpose was valuation for computation of capital gains. The report was filed in the prescribed form. All the required particulars/information were furnished. In the said report, description of the property, location thereof, whether situated in residential/commercial/mixed/industrial area, and classification thereof were shown. As regard, proximity to civicamenities, it was stated that the plot is very close to "Raj Bhawan". All other amenities except cinema were within 1 k.m. Means and proximity to surface communication by which the locality is served were also stated. All other requisite particulars, as specified, were stated.

3.After noticing that the total development area of land is 4605 sq. yds with an F.S.I. of 1.33, it was stated

"I am informed that the land was reserved for a vegetable& retail market before 1965. I am of the opinion that it is possible to get this reservation modified or waived and hence I consider the effect of this on the value of the property negligible. In any event there will be no loss of F.S.I. even if reservation is retained for the purpose of my valuation of share in the property.

Based on the sales instances the prices given in "Accommodation Times" I am of the opinion and feel that the rate of the Residential Apartment in the area in1981 would be in between Rs.2500 to Rs.3000/- per S.FT. I think that the lower value of Rs.2500 per S.FT. as fair and reasonable.

This rate will be fair and reasonable for the share of property belonging to Late Mr. Natwarlal Shroff & Late Mrs. Sonabai Shroff as the title of their holding is clear and Marketable.

I am appointed to give value of the share of the property belonging to the Late Mrs. Sonabai Shroff i.e. 1/4th share of the property.

As regards (valuation of) 1/4th share of Mr. Bhagwandas Dwarkadas Shroff and 1/4th share of Mr. Madhavdas Dwarkadas I am informed that there is suit pending in courts regarding title to the property and tenancy rights. Each of the other holders will fetch the reports of valuation for their respective shares separately.

In 1981 the cost of construction may be taken atRs.275/- per S.FT. Further, considering the Builders Profit Rs.700/- per S.Ft. and deducting both the value of cost of construction and the Builders profits from the above stated works out to Rs.1,525/- per S.FT of sale able area. Considering that it is a jointly owned property, I take it as fair and reasonable.

As these rate the value of the share of the property belonging to late Mr. Natwarlal Shroff comes to -

16536.5 x 1525.00 = Rs.2,52,18,165.05

Say Rs.2,50,00,000.00 .(I)

Though the building itself is old and dilapidated, I consider the scrap value of it at Rs.50/- per S.FT. As the Built up area is 16000 S.FT., the scrap value of structure comes to Rs.8,00,000.00. The value of the share of Late Mr. Natwarlal Shroff of this scrap value isRs,8,00,000.00. The value of the share of Late Mr. Natwarlal Shroff of this scrap value is

= Rs. 2,00,000.00 .(II)

Therefore value of the property belonging to Late Mr.Nartwarlal Shroff works out to (I)+(II).

Rs.2,50,00,000.00+Rs.2,00,000.00