Term ‘Scholarship’ and ‘stipend’ both serve one purpose and exempt u/s 10(16) – ITAT

Term ‘scholarship’ and ‘stipend’ though different serve one purpose and exempt u/s 10(16) of the Income Tax Act – ITAT

In a recent judgment, ITAT Raipur has allowed exemption u/s 10(16) towards stipend holding that term ‘scholarship’ and ‘stipend’ though different but the purpose is one and same stipend received was exempt u/s 10(16) of the Income Tax Act.

ABCAUS Case Law Citation:
5121 (2026) (04) abacus.in ITAT

In the instant case, the solitary grievance of the assessee was that the Assessing Officer (AO) had treated the stipend received by the assessee as salary and not scholarship, therefore, denied exemption u/s 10(16) of the Income Tax Act, 1961 (the Act).

The assessee was registered as Trainee in a Hospital and Medical Research Centre and was doing super Speciality. That during this tenure of his course which was for 3 years, he was getting stipend for his entire duration of 3 years.

At the assessment proceedings, the assessee had also furnished certificate issued by College Authority, wherein it had been mentioned that the assessee was receiving stipend.

The ITAT noted that the CIT(Appeals)/NFAC in its impugned order had sustained the addition made by the A.O on the ground that the assessee had not filed any documentary evidence demonstrating specifically that he was receiving scholarship from the Hospital and Medical Research Centre.

The ITAT further observed that admittedly, assessee’s educational qualification and that he was Super Speciality Trainee had all been accepted by the Department. It was also accepted that he had received stipend for all the 3 years. Further, Revenue had not brought on record distinction to demarcate ‘scholarship’ and ‘stipend’ for not granting exemption u/s 10(16) of the Act.

The ITAT opined that both terms are used to demonstrate a particular sum of money to assist a student to complete educational degrees, for which, he has been enrolled. Essentially, the word ‘scholarship’ is used in Educational Institution in higher degree college where the word ‘scholar’ is associated with the package given to the student for his academic brilliance, therefore, such financial aid is referred to as term ‘scholarship’. Similarly, in any other professional institution whatever the amount is given to a particular person for completion of training, is referred to as ‘stipend’.

The ITAT held that the terms are though different but the purpose is one and same i.e. to assist a person to complete educational course, for which, he has been enrolled.

The ITAT observed that the Revenue had not negated the facts on record and at the same time, had not given any specific findings regarding the fact that the stipend is not scholarship. Mere on the basis of terminology, the rightful exemption cannot be denied to the assessee when all other facts were admitted by the Department.

Accordingly, the ITAT set-aside the order of the CIT(Appeals)/NFAC and directed the AO to delete addition from the hands of the assessee.

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