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Issues involved:
The rejection of application for continuation of approval u/s. 80G and the finding that expenditure for religious purposes exceeded the limit laid down in section 80G(5B) of the Income-tax Act, 1961. Issue 1: Rejection of application for continuation of approval u/s. 80G The assessee-Sansthan filed an application for renewal of approval u/s. 80G, which was rejected by the CIT due to expenditure exceeding the 5% limit for religious purposes. The expenditure included amounts spent on offerings to saints and payments to a charitable trust in connection with a religious event. The CIT considered the event as religious due to worship of Shree Ram, a Hindu deity. The assessee argued that the event was a seminar on moral values, not a religious activity. The Tribunal held that the expenditure was for charitable, not religious, purposes as it aimed to spread moral values, not religious teachings. The Tribunal directed the CIT to grant approval based on the application. Issue 2: Exceeding limit for religious purposes under section 80G(5B) The CIT found that the expenditure on the religious event exceeded the 5% limit specified in section 80G(5B) due to payments made in connection with the event. The Tribunal, however, distinguished between religious and charitable purposes, emphasizing that the event aimed to propagate moral values, not religious teachings. Referring to a previous court decision, the Tribunal highlighted the thin line between religious and charitable activities. Since the trust's objects were not religious in nature and the expenditure was for spreading social values, the Tribunal concluded that the expenditure was charitable, not religious. Therefore, the CIT's denial of approval u/s. 80G was deemed erroneous, and the Tribunal directed the approval to be granted.
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