Joint ownership does not defeat capital gains exemption where the assessee alone funds the new asset or specified bonds.

Exemption under sections 54 and 54EC depends on the source of investment, not on whether the new residential property or specified bonds are purchased in joint names with the assessee's spouse. Where the entire consideration is paid from the assessee's funds and no contribution by the spouse is shown, the spouse's name in the sale deed or bonds does not reduce the assessee's entitlement. The analysis also relies on section 45 of the Transfer of Property Act, under which title follows the source of consideration absent a contrary arrangement. On that basis, full exemption was considered available and denial of half the benefit was unsustainable.

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Issues: Whether exemption under sections 54 and 54EC of the Income-tax Act, 1961 is available in full when the investment is made from the assessee's funds but the residential property or bonds are purchased jointly with the assessee's spouse.

Analysis: The investment for exemption under sections 54 and 54EC is the material factor, and the provisions do not expressly require that the new asset or specified bonds must stand only in the assessee's name. Where the entire consideration has flowed from the assessee and no contribution is shown from the spouse, the mere inclusion of the spouse's name in the sale deed or bonds does not create a right in the spouse so as to reduce the assessee's entitlement. Section 45 of the Transfer of Property Act also supports the conclusion that title follows the source of consideration in the absence of a contrary arrangement.

Conclusion: The assessee was entitled to the full exemption under sections 54 and 54EC, and denial of 50% benefit on the ground of joint names was unsustainable.

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