JUDGMENT
R. Jayasimha Babu, J.
1. According to the Revenue, the assessee should be penalised in anticipation of a likely violation. We are unable to appreciate this argument or subscribe to the same.
2. The assessment year with which we are concerned is the assessment year 1986-87. The provisions of Section 11(5) of the Income-tax Act were amended with retrospective effect from April 1, 1983, by the amending Act of 1991 and the time for disinvestment was extended up to March 31, 1993. During the assessment year with which we are now concerned, the law was that the charitable trust could hold investments contrary to the provisions of Section 11(5) of the Act, but, was under an obligation to dis-invest on or before March 31, 1993, and, thereafter, hold the investments in the modes permitted by law.
3. During the assessment year 1986-87, the assessee held investments contrary to Section 11(5) of the Act, but, by virtue of Section 13(1)(d), proviso (iia) of the Act, it had time till March 31, 1993, to disinvest. The assessee, therefore, could not have been denied the benefit of the exemption for this assessment year on the ground that as on the date the Tribunal heard the appeal which was subsequent to March 31, 1993, the assessee had not disinvested. That question will be relevant for the years subsequent to March 31, 1993, and not for earlier years.
4. It is well settled law that a person, who has complied with the law as it exists, cannot be penalised by reason of the amendment to the law effected subsequently, unless such intention is expressly stated and the imposition of such penalty is not contrary to any of the provisions of the Constitution.
5. The argument that the assessee should be denied the exemption for the earlier assessment year when it had not contravened the law, because it had been found to have contravened the law in a subsequent assessment year cannot be accepted. It is the assessment year with which the assessment is concerned, and it is the eligibility of the assessee with reference to the law applicable in that year that is required to be looked into.
6. The Tribunal has rightly stated in paragraph 3 of its order while rejecting the Revenue’s application for reference that it had recorded a categorical finding that till March 31, 1993, it could not be said that the trust had invested its funds contrary to the provisions of Section 11(5) of the Act, since the Legislature had allowed time till March 31, 1993, to reinvest such investments in accordance with the provisions of Section 11(5) of the Act by inserting the proviso (iia).
7. The tax case petitions are, therefore, dismissed.