Religious expenditure within the statutory limit cannot by itself justify refusal of charitable approval.

Approval under Section 80G was treated as available where the institution's religious expenditure remained below the statutory tolerance limit. The Tribunal relied on undisputed figures and held that application of income for religious purposes within that limit did not justify refusal of approval on the ground that some objects were religious in nature. On that basis, the approval was upheld and the Revenue's challenge failed.

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Issues: Whether approval under Section 80G(5) could be denied on the ground that some objects were religious in nature, when the institution's religious expenditure was found to be below the statutory limit.

Analysis: The appeal arose under Section 260A of the Income-tax Act, 1961 against the Tribunal's view that the assessee had incurred religious expenditure of less than 5% of its total income in the relevant years. The statutory framework under Section 80G(5B) treats an institution or fund as eligible where expenditure of a religious nature does not exceed the prescribed limit, and the Tribunal recorded that the relevant figures were undisputed. On that factual basis, the Tribunal held that the assessee's application of income on religious purposes fell within the statutory tolerance and that the approval under Section 80G(5) could not be refused on that ground.

Conclusion: Approval under Section 80G(5) was upheld and the challenge by the Revenue failed.

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