Religious expenditure limit requires fresh factual quantification against the statutory ceiling; exemption application to be reconsidered.

Tribunal remanded the limited issue of whether the assessee trust's expenditure on religious activities exceeds the statutory ceiling applicable to tax-exempt charitable trusts for fresh factual determination. It found the CIT(Exemption) rejected the application solely on the basis of an object in the trust deed without quantifying actual religious expenditure, and directed reassessment of that quantification and reconsideration of the Form 10AB application in accordance with law, with the assessee to comply with notices and avoid undue adjournments.

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Issues: Whether the assessee trust's objects/activities render it ineligible under Section 80G(5) of the Income-tax Act, 1961 and whether the trust's expenditure on religious activities exceeds the statutory limit under Section 80G(5B) of the Income-tax Act, 1961.

Analysis: The Tribunal noted that the Commissioner of Income-Tax (Exemption) rejected the Form 10AB application solely on the basis of object no.8 of the trust deed, treating the trust as a religious-cum-charitable (composite) trust. The Tribunal observed that the CIT(Exemption) did not record any specific finding on whether the assessee's actual expenditure on religious activities exceeded the 5% threshold prescribed by Section 80G(5B). The statutory scheme permits expenditure up to the prescribed limit; therefore the relevant factual enquiry is whether the trust surpassed that statutory ceiling. The Tribunal directed that the limited factual question of quantification of religious expenditure be examined afresh by the CIT(Exemption) and the application reconsidered in accordance with law, with the assessee complying with notices and avoiding unnecessary adjournments.

Conclusion: The matter is remanded to the Commissioner of Income-Tax (Exemption) for a limited reconsideration to determine whether the assessee's expenditure on religious activities exceeds the 5% limit under Section 80G(5B) of the Income-tax Act, 1961; appeal allowed for statistical purposes and directed reconsideration accordingly in favour of the assessee's entitlement to such examination.

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