Joint ownership with a spouse does not bar capital gains reinvestment relief where the taxpayer retains property rights.

Section 54 does not require a replacement residential property to be acquired exclusively in the taxpayer's name. Where the taxpayer retains joint title, control and domain over property purchased with a spouse, and the investment originates from sale proceeds of the original property, including sums transferred to the spouse, joint ownership does not by itself defeat the deduction. Deemed ownership and spousal income-clubbing provisions support this treatment. A precedent involving property acquired solely in an adopted son's name is distinguishable because the taxpayer had relinquished all rights to a third person. Accordingly, joint purchase with a spouse does not preclude the claimed Section 54 deduction.

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Issues: Whether deduction for capital gains reinvestment is available where the new residential property is acquired jointly with the assessee's spouse and a part of the sale proceeds is transferred to the spouse for that acquisition.

Analysis: Section 54 requires investment of the capital gains in purchase of a new residential property and does not require the property to be acquired exclusively in the assessee's name. The assessee retained joint title, control and domain over the new property; the spouse was not a third party or stranger. The entire investment originated from the sale proceeds of the original property, including the amount transferred to the spouse. The deeming ownership and clubbing provisions applicable to transfers of house property and income to a spouse support treating the arrangement as not disentitling the assessee from the benefit. The precedent concerning acquisition exclusively in an adopted son's name was distinguishable because the assessee there had relinquished his rights in favour of a third person.

Conclusion: Deduction under Section 54 cannot be denied merely because the new residential property was purchased jointly with the assessee's wife; the assessee is entitled to the claimed deduction.

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