TMI Blog1979 (3) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... ties negatived this claim. They held that the stipend received by the assessee was only a part of his remuneration for services rendered to the George Washington University, USA., and therefore, they were taxable. The assessee is Dr. Krishnan A.V. Pandalai, Professor and Head, Aeronautical Engineering, Institute of Technology, Madras. It is stated that on 18th Feb., 1970, the assessee received a telegram from the Director, National Science Foundation, Washington, D.C. reading under:- To Dr. Krishnan A.V. Pandalai, Professor and Head, Aeronautical Engineering, Institute of Technology, Madras. National Science Foundation pleased to offer you In residence Fellowship at George Washington University, Letter follows: W.D. MCELORY, DIRECTOR The letter referred to in the telegram is dt. 17th Feb., 1970, which reads as follows:- Dear Dr. Pandalai, The Director of the National Science Foundation Dr. W.D. Mcelory, has asked me to confirm his cablegram informing you that you have been awarded a Senior Foreign Scientist Fellowship and to extend his congratulations. This Fellowship will enable you to carry out the scientific activities that you and the host institution have agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as a visiting Professor. Thanking you, Yours faithfully, Sd/- (K.A.V. Pandalai) The learned departmental representative has placed before us certain extracts from the Note of National Science Foundation, Washington, D.C. (Information for Senior Foreign Scientist Fellows), referred to in the above letter, dt. 17th Feb., 1970. They read as under:- 1. The Nature of NSF Senior Foreign Fellowship: NSF Senior Foreign Scientist Fellowship awards are made to senior foreign scientists who have outstanding records of performance in their fields of specialization. The achievements of these scientists must be such that they are able to make significant contributions to science training and/or research at U.S. institutions of higher education. Emphasis is given to placing each foreign scientist (a) in a graduate school where this contribution, through instructional activities, will be most helpful in strengthening training in science and/or (b) at that institution where his participation in scientific research will have the most favourable oriental for producing significant advances. Fellows are afforded much latitude in their programme activities and are free to participate in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplementary stipend as provided in paragraph 4(h) and a supplementary allowance from his host institution to reimburse him for actual travel costs, medical insurance premiums and other exceptional expenses not covered by funds provided by his fellowship. He may, also accept any grants, gifts, or sabbatical pay from sources within his country of origin as a supplemental allowance to his fellowship stipend. The assessee also produced a certificate from Mr. Harold Liebowitz, which reads as follows: This is to certify that the National Science Foundation (NSF) Fellowship Stipend granted to Dr. K.A.V. Pandalai, of the Indian Institute of Technology, Madras, India, during the period January, 1971 to October, 1971 is a scholarship granted to him for meeting the cost of education, study and research at the School of Engineering and Applied Science of the George Washington University, Washington, D.C., U.S.A. That the assessee received the stipend under the National Science Foundation (NSF) Fellowship is clarified by the letter, dt. 2nd Sept., 1971, which is as follows: To Internal Revenue Service 2nd Sept., 1971. Krishnan A.V. Pandalai has been paid a stipend of $ 11,250.00 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ', Report of the School of Engineering and Applied Sciences, The George Washington University, Washington D.C., Aug., 1971. A list of other papers published later by me and my co-workers and associates with the research work done by me at George Washington University is attached for your information. Yours faithfully, Sd/- (Dr. K.A.V. Pandalai) 4. On the above materials we have to decide whether the assessee is entitled to the exemption claimed under s. 10(16) of the IT Act, 1961. s. 10(16) reads as follows: "10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included (16) Scholarships granted to meet the cost of education. The question is whether the amount received by the assessee would fall within the term "scholarship". It is needless to say that the cost of education in a foreign country would necessarily include the expenses for the stay and maintenance of the scholar in that foreign country. This is exactly what the assessee has set out in his letter to the ITO, dt. 23rd Feb., 1974, which is extracted above. Further, in the "Information for Senior Foreign Scientist Fellows", ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is referred as "stipend", we are unable to hold that it was remuneration for services rendered as claimed by the Revenue. In the very extract filed by the Revenue, it has been stated that the award is NSF Senior Foreign scientist Fellowship Award". The travel allowance and stipend payments were paid to the fellow under the above scheme. Further the amount payable under the above scheme for each Senior Foreign Fellow has to be determined by the foundation and for this purpose, the level of salaries paid to U.S. Faculties of similar rank and status of that institution is taken into account. In the context of the scheme referred to above, we are of the opinion that the payments made can only be considered as "scholarships". 7. We are supported in our above view by the following: In the "Information for Senior Foreign Scientist Fellows" extracted above, it is clearly mentioned that the fellow should not accept any other similar award from sources within the United States. It is further mentioned that the fellow may, accept grants, gifts, etc.; from within the country of his origin as a supplemental allowance to his fellowship stipend. The assessee has further set out the research ..... X X X X Extracts X X X X X X X X Extracts X X X X
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