Exemption for charitable trusts depends on the law for the relevant year, not later non-compliance or amendments.

Exemption eligibility for a charitable trust must be tested with reference to the law and facts applicable to the relevant assessment year. For assessment year 1986-87, the trust could not be denied exemption merely because disinvestment of investments contrary to section 11(5) had not occurred by the time of the later appellate hearing; later non-compliance or a subsequent amendment could not retrospectively defeat the exemption unless the statute expressly so provided. The trust was therefore entitled to exemption for that year.

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Issues: Whether the assessee could be denied exemption for assessment year 1986-87 on the ground that it had not disinvested investments contrary to section 11(5) by the date of the later appellate hearing, and whether a subsequent amendment or later-year non-compliance could defeat the exemption for the earlier year.

Analysis: The relevant enquiry was confined to the assessment year in question. For that year, the law permitted the charitable trust to hold investments contrary to section 11(5) but required disinvestment within the period allowed by the proviso to section 13(1)(d). The later fact that disinvestment had not occurred by the time the appeal was heard could not be used to deny exemption for the earlier assessment year, because liability had to be tested against the law applicable in that year. A person who has complied with the law as it then stood cannot be penalised by a later amendment unless the statute clearly provides otherwise.

Conclusion: The assessee was entitled to the exemption for assessment year 1986-87, and the Revenue's objection based on later non-disinvestment failed.

Ratio Decidendi: Exemption eligibility must be determined with reference to the law and facts applicable to the relevant assessment year, and a later default or later amendment cannot retrospectively defeat that entitlement unless the statute expressly so provides.

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