The assessee, a shareholder in Company J, sold part of his shares.  He filed a computation showing a capital loss based on the company’s asset valuation and appended the valuation report. The AO made an addition, excluding the value of leased land from the fair market value (FMV) for computation of capital gains. The Commissioner (Appeals) and the Tribunal accepted the assessee’s valuation, holding that the leasehold interest should be included because the company effectively controlled the land. The Court held that the leasehold interest in the land was an asset of the company and must be included when determining the FMV of unquoted shares as on 31-03-1981. As the lease term remaining exceeded 20 years, the lessee was effectively the de facto owner; therefore, the land’s leasehold value could not be excluded from the asset valuation for computing capital gains. The Tribunal correctly applied FMV principles rather than relying solely on the balance-sheet figures under the Wealth-tax Rules.(AY 1997-98)