Stipend during training period (Income Tax)

This query is : Resolved

( Author )
01 March 2009

Dear All,

Kindly solve this query.
Stipend which we get during our Articleship period is taxable under the Income Tax Act or not?

Regards,
Pramod.

CA Devanshi Gandhi (Ajani)

( Expert )
01 March 2009

normally its taxable but if Stipend is for further education or gaining knowledge i.e. in nature of scholarship (meeting the cost of education) than its exempt u/s 10[16] of the I T act. it can b claimed as exempt income.

CA Praveen Chopra

( Expert )
01 March 2009

As per Jaipur Bench of Tribunal in Sudhir Sen case, it is not taxable.

CA.Tarun Maheshwari

( Expert )
01 March 2009

Stipend is not taxable.

CA Nitin Wadhwani

( Expert )
01 March 2009

Normally, it is taxable.
Its exempt if conditions of sec.10(16) are satisfied.

B.Chackrapani Warrier

( Expert )
01 March 2009

The case referred by Mr.Chopra is Sudhir Kumar Vs. ITO (1983) 17 TTJ (Jp-Trib) 228.

B.Chackrapani Warrier

( Expert )
01 March 2009

Ms.Devanshi, the Madras High Court in CIT Vs. V.K. Balachandran's case reported in (1984) 147 ITR 4 deceided that the whole amount of scholarship received need not be spend for claimimg exemption u/s 10(16).

CA Devanshi Gandhi (Ajani)

( Expert )
02 March 2009

form in which scholarship is received is important and not its application to claim exemtion U/S 10(16).i.e it should be related to education and nt in the form of salary or anyother.

CA.Tarun Maheshwari

( Expert )
02 March 2009

Good discussion. Thanks to Warrier Sir and Ms. Devanshi for our updations. But what is the ultimate solution. Is the articleship stipend taxable or not? And please let us know what is the decision in SUdir Kumar Vs ITO case.

Pramod Kumar Sultania

( Author )
02 March 2009

Thanx for all ur discussions bt my query is not resolved in all this.
Please reply.

CA.Tarun Maheshwari

( Expert )
02 March 2009

I think their discussion indicates that articles stipend is taxable as it is not for further education, as explained by Ms. Devanshi in her first reply.

CA Devanshi Gandhi (Ajani)

( Expert )
02 March 2009

its exempt if object is to meet cost of education i.e. if it is paid only for meeting the cost of education, even if its not spent. the exemption in the hands of recipient depends on what it is meant for the person paying or distributing the scholarship. now question is Stipend which we get during our Articleship period is to meet cost of education ???? what the CA Act says about this??

CA Devanshi Gandhi (Ajani)

( Expert )
02 March 2009

http://www.taxworry.com/2006/11/stipend-may-or-may-be-tax-free.html

CA Devanshi Gandhi (Ajani)

( Expert )
12 March 2009

http://www.caclubindia.com/experts/experts_message_display.asp?group_id=142706