In this appeal, revenue has objected to Order of CIT (Appeals)- XX, Ahmedabad dated 1-10-2002 passed for assessment year 2001-02 by way of following grounds: learned CIT(A) has erred in law and on facts in deleting addition made by Assessing Officer in respect of "1.Rs. 4,07,048 received by assessee being Humboldt Research Award from Alexander Von Humboldt Foundation, Germany ignoring fact that amount was not scholarship falling within ambit of section 10(16) of Income-tax Act and further that amount received by assessee was not fully utilized to meet cost of education but also for his financial investment i.e. purchase of shares, RBI Relief Bond, purchase of NSC and mutual fund, etc. 2.Further, learned CIT(A) has erred in concluding that moot question was whether amount received by appellant was scholarship exempt under section 10(16) or award exempt under section 10(17A) of Income-tax Act ignoring fact that amount of Rs. 4,07,048 was not scholarship but salary as treated in assessment order. 3.On facts and circumstances of case, learned CIT(A) ought to have upheld order of Assessing Officer on above said ground. 4.It is, therefore, prayed that order of learned CIT(A) may be set aside and that order of Assessing Officer be restored to above extent." 2. We have heard parties. 3. brief facts relating to issue involved in this appeal and as have been revealed from records are that during course of assessment proceedings for assessment year 2001-02, return for which was filed by assessee declaring income of Rs. 4,26,580 on 13-7-2001, Assessing Officer noticed two credit entries in assessees bank account viz.on 29-8- 2000 and credit entry of Rs. 4,07,048 on 12-10-2000. 4. When assessee was called upon to explain source of these credit entries assessee submitted that first deposit represented Award received by him from Jawaharlal Nehru Birth Centenary Lecture and second entry was out of savings from scholarship received from Humboldt Research Award. amount of Rs. 4,07,048 was firstly claimed exempt under section 10(17A) and, later on, was claimed exempt under section 10(16) of Act. Assessing Officer, however, did not agree with assessees claim on ground that so far as section 10( 17A) was concerned, receipt was not Award instituted by Central or State Government and so far as claim under section 10(16) was concerned, it was not exempt because same was not given to meet cost of education. According to Assessing Officer, amount received by assessee was not scholarship but Award which did not fall within ambit of section 10(16) and, therefore, after relying on following observations of Honble Madras High Court in case of Dr. V. Mahadev v. CIT [1990] 184 ITR 533, disallowed assessees claim: Observation of Honble High Court: "the opening words of section 10 of Income-tax Act, 1961, clearly indicate that items mentioned thereunder are income in character but are nevertheless excluded from computation of taxable income. Under provisions of section 10(16), scholarship would not be included in taxable income provided it was granted to meet cost of education". In that case it was further held that "the material on record showed that amount represented wages. assessee had also received overtime charges. Wages including overtime charges could not be considered to be scholarship within meaning of section 10(16). assessee was not entitled to exemption under section 10(16)". 4.1 Assessing Officer, had further observed that amounts so received b y assessee, having been utilized for purchase of shares, RBI Relief Bond, NSC and mutual fund, same could not be said to have been given as scholarship. 5. On appeal by assessee, CIT (Appeals) allowed assessees claim by observing as under: "I have considered facts of case, judicial decisions relied upon by Assessing Officer as well as authorised representative and submissions made. During course of appellate proceedings, opportunity was allowed to Assessing Officer to comment on submissions made by authorised representative. Assessing Officer relied on assessment order and stated that he had no further submission to make. From perusal of details placed on record, it is seen that appellant, being Director of PRL, is employee of PRL. CSIR approved name of appellant as beneficiary of Humboldt Research Award. As per scheme of award, appellant received amount of DM 30,000 out of which, sum of Rs. 4,07,080 was credited to bank account of appellant. appellant incurred certain expenses out of amount as stated above. surplus therefrom was utilized by him for investment in RBI Relief Bonds, shares, NSC. etc. appellant has also submitted evidence regarding expenditure made by him in Germany. moot question is whether amount received by appellant is scholarship or award? Secondly, is it exempt under section 10(17A) or under section 10(16)? After going through Literature of Humboldt Research Foundation, letter of CSIR, OM of PRL, it is clear that amount received by appellant is scholarship. After considering provisions of section 10(17A), it is evident that it is not exempt under section 10(17A). plain reading of section 10(16) would show that scholarship received by appellant is covered therein. This is also supported by ratio of decision of Madras High Court in Balachandranscase. As stated therein, fact that recipient does not spent whole of amount or save something out of it or utilizes it for other purposes would not detract from character of payment being one of scholarship. In view of foregoing, it is held that amount of Rs. 4,07,080 received by appellant is exempt under section 10(16)." 6. It was, in view of above facts and circumstances of case, that ld. DR has supported order of Assessing Officer, whereas ld. counsel for assessee in addition to supporting order of CIT (Appeals) relied on decision of Honble High Court of Madras in case of CIT v. V.K. Balachandran [1984] 147 ITR 4. With respect to decision relied upon by ld. Assessing Officer in case of Dr. V. Mahadev (supra), ld. counsel for assessee submitted that same was distinguishable on facts as well as under law. 7. ld. DR has supported order of CIT (Appeals). 8. We have considered rival submissions, facts and circumstances and decision relied upon by parties and are of opinion that so far as decision relied upon by Assessing Officer is concerned, same is distinguishable on facts because assessee in that case had received was payment in lieu of services which was in nature of pay or wages and it was rightly deleted to be so, whereas so far as decision in case of V.K. Balachandran (supra) relied upon by assessee is concerned, same is directly on issue. 8.1 In aforesaid case of V.K. Balachandran (supra), brief facts read as under: "The assessee, professor of mathematics, was granted grant-in-aid by foreign university for doing advanced research in field of mathematics. assessees claim that amount received by him was scholarship and hence not liable to income-tax under section 10(16) of Income-tax Act, 1961, was negatived by ITO." 8.2 On appeal by assessee, AAC allowed assessees claim after observing that there was no employer-employee relationship between Institute and assessee. On further appeal to Tribunal by Department, Tribunal upheld order of AAC on ground that same was exempt under section 10(16) of Act. 8.3 On reference by revenue, Honble High Court upheld order of Tribunal and important observations of Honble Court, which in our opinion, are relevant, are in following terms: "In section 10(16), however, scholarship is not used in that sense of something in educational opportunity which is given free. basic postulate of scholarship in clause (16) as earlier mentioned is that it is income receipt. Nevertheless it is excluded from total income by being brought under section 10. view of income-tax statute of "scholarship therefore, differs from 10. view of income-tax statute of "scholarship therefore, differs from popular, or dictionary, view of a" scholarship whereas under popular view, scholarship is education made available gratis, sense in which same expression is used in Income-tax Act is positive payment made to scholar for pursuit of his education. If scholarship is made free, it would not naturally come within ambit of section 10(16). In sense of payment made for studies, scholarship necessarily means some payment to meet cost of education, payment being made, to person pursuing education and incurring cost thereof. There are, therefore, two considerations which, together, make up concept of "scholarship for meeting cost of education" within meaning o f section 10(16). One is that scholarship is payment intended to be income receipt in hands of scholar. other one is that whatever is paid is intended to meet cost of education of recipient. Since purpose is to meet cost of education, question whether quantum of payment is adequate or inadequate, or is or is not in excess of requirements are all beside point. scholarship may only meet partial cost of education. Still it would be scholarship within meaning of section 10(16). Again, scholarship might, in given case, prove to be more than enough for meeting cost of education, and scholar may make saving out of it, or even spend surplus otherwise. It is not appropriation of scholarship that matters. If whole object of payment is to meet cost of education of person, then that is enough. No further inquiry is called for in order to exclude amount from taxable total income under section 10(16). As we have earlier indicated, Departments case before Tribunal was that assessee utilised grant-in-aid paid by Princeton Institute not only for his passage to and from, America and for his boarding and lodging in Princeton, New Jersey, but also for air passage of his wife and two children and for their residential accommodation and boarding during relevant period. This argument, however, was rightly rejected by Tribunal as having no bearing on eligibility of assessee to exclusion of his scholarship from his taxable total income. Tribunal observed that experience of those who have gone abroad was that person could live there more economically with his family than as alone or as single boarder in hotel or other place. Tribunal also observed that assessee, particularly, had been in position to maintain himself and members of his family within means afforded by grant-in-aid given by Princeton Institute, although size of grant-in-aid was, perhaps, fixed only with reference to scholar alone, according to western standards. It is unnecessary to go into these aspects because, in our judgment, eligibility of scholarship to be excluded from assessees total income depends on what it is meant for by person paying or disbursing scholarship. If it is paid only for meeting cost of education, fact that recipient does not spend whole amount towards education or that he is able to save something out of it would not detract from character of payment being one for scholarship. assessee in this case was named as "exchange visitor" to engage himself as member in school of mathematics for doing advance research in field of mathematics. To defray his expenses of study, amount of $ 10,000 for study, $ 2,000 for travel and further grant of $ 13,800 for sundries were given to assessee. There can, therefore, be no doubt that grant-in- aid was scholarship to meet cost of assessees education. Mr. Jayaraman did not argue that advance research cannot be brought within broad connotation of expression education. These considerations are, in our opinion, enough to return affirmative answer to following question of law referred to us: Whether, on facts and in circumstances of case, grant-in-aid received by assessee would be exempt under section 10(16) of Income- tax Act, 1961? Before closing judgment, it is necessary to point out that interpretation we have placed on section 10(16) is way in which it has been understood and is being applied in several cases by highest revenue authority under Income-tax Act, namely, CBDT. Our attention has been drawn to few circulars where Board have issued instructions to subordinate officers as to how they have got to deal with scholarships, remuneration, maintenance grants, and other receipts which are received by foreign scholars in Indian institutions of higher learning like Council of Industrial and Scientific Research. Board, we may observe, has proceeded o n liberal understanding of provisions of section 10(16) and have accordingly given instructions to departmental officials at assessment level to grant exemption from tax to scholarships apparently without making much fuss about precise nature of receipts so long as receipts of scholars can be broadly brought under heading "Scholarship" and so long as terms of scholarship do not contain any purpose extraneous to education. In face of these circulars, we are at loss to understand why present reference is being pressed to decision by Department in Madras charge. There cannot be one rule for foreign students receiving scholarships in India and tax treatment of such scholarships under Income-tax Act, and quite different rule or contrary application of same rule, so far as Indian scholars in foreign parts are concerned. nature of scholarship is same whoever receives it, whether he be Indian scholar or foreigner, whether he be white, brown, or black, whether he receives scholarship from Indian institution or from Western institution. essence of scholarship is that it should pay for educational enterprises of mans pursuit after knowledge. If scholarships are given for such purpose, it cannot matter whether recipient is of Indian origin or is of foreign origin. We hope that there would be even handed justice from CBDT and all subordinate officials of Income-tax Department in matter of applying exemption for scholarships irrespective of to whom and by whom these scholarships are meted out. For reasons which we have earlier rendered on facts of this case and on true construction of statutory provisions, our answer to question of law must be in favour of assessee and against Department. We dispose of reference accordingly. Commissioner of Income-tax will pay costs of assessee in this case. Counsels fee Rs. 500." 9. Since facts and circumstances of present case and payment made to assessee are similar to facts and circumstances in case of V.K. Balanchandran (supra), we respectfully following decision of Honble Madras High Court, uphold order of CIT (Appeals). Madras High Court, uphold order of CIT (Appeals). 10. In result, appeal of revenue is dismissed. *** Assistant Commissioner of Income-tax v. Girish Saran Agarwal