COMMISSIONER OF INCOME TAX Vs. BALACHANDRAN V K

JUDGEMENT

(1.) THIS is a case in which the assessee, a Professor of Mathematics in the Ramanujam Institute of the Madras University, was given a grant-in-aid of $10,000 and other fringe payments during the academic year 1970-71 by the Princeton Institute of Advanced Study as consideration for his doing research work at the Institute in New Jersey for a few months. The assessee was being assessed to income-tax under our I.T. Act, 1961, in the status of a resident of India. He claimed that the grant-in-aid received by him from the Princeton Institute was to be excluded from his taxable income under s. 10(16) of the I.T. Act. The ITO turned down the assessee's claim on the score that the grant-in-aid was nothing but salary paid by a foreign institute to the assessee as a professor of mathematics. On appeal, the AAC went into the question whether the grant made by the Princeton Institute can be regarded as salary. He held that there was no employer-employee relationship between the institute and the assessee and the grant was not a salary, but a scholarship paid to the assessee for doing research work as a student of mathematics. In the departmental appeal against this order, the Tribunal held that the grant received by the assessee was undoubtedly of an income-character, but nevertheless it must be considered to be a scholarship and on that account, was to be excluded from the total income under s. 10(16) of the Act.

(2.) IN this reference, the Tribunal's decision is canvassed by the Department as erroneous in point of law. We do not think so. The Tribunal, in our opinion, has understood the law aright and has also taken a reasonable view of the facts.

(3.) AS we have earlier indicated, the Department's case before the Tribunal was that the assessee utilised the grant-in-aid paid by the Princeton Institute not only for his passage to and from, America and for his boarding and lodging in Princeton, New Jersey, but also for the air passage of his wife and two children and for their residential accommodation and boarding during the relevant period. This argument, however, was rightly rejected by the Tribunal as having no bearing on the eligibility of the assessee to exclusion of his scholarship from his taxable total income. The Tribunal observed that the experience of those who have gone abroad was that a person could live there more economically with his family than as alone or as a single boarder in a hotel or other place. The Tribunal also observed that the assessee, particularly, had been in a position to maintain himself and the members of his family within the means afforded by the grant-in-aid was, perhaps, fixed only with reference to the scholar alone, according to western standards. It is unnecessary to go into these aspects because, in our judgment, the eligibility of a scholarship to be excluded from an assessee's total income depends on what it is meant for by the person paying or disburising the scholarship. If it is paid only for meeting the cost of education, the fact that the recipient does not spend the whole amount towards education or that he is able to save something out of it would not detract from the character of the payment being one for scholarship.