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• Ms. Aarti Rai was first appointed in July'2003 in IILM- UBS. Thereafter, she worked in World School, Gurgaon (now known as 'Banyan Tree school') of the appellant. In fact, it is Ms. Arti Rai who conceptualized the setting up 9fthe World School at Gurgaon.
The appellant has the system of providing scholarships to the student /employees based on the following pattern:
A. Scholarships to Students' Scholarships are given to the merit holder students and also to other students-who after passing out from the college intends to pursue higher studies from abroad. Such scholarships are provided subject to the condition that these students would serve the institution, for a minimum period of 5 years after completion of their studies abroad, at reduced salary which would be decided by the Director of the Institute. B. Scholarships to Employees/Faculties for Higher Studies Scholarships are given to the employees of the appellant who intends to pursue higher studies from abroad, Such scholarships are provided subject to the condition that these employees would serve the institution, after completion of their studies abroad, under either of the following two alternatives:

7.3 Apropos ground no. 3 to 3.2 raised in Assessee's appeal is concerned, which is relating to upholding the action of the AO in treating the scholarship given to Ms. Aarti Rai, as being in violation of provisions of section 13(1)© of the Act, we find that AO invoked the provisions of section 13(1)© and observed that the trust had granted scholarship of Rs. 13.36 lakhs to Mr. Aarti Rai for pursuing a course in London School of Economics and the assessee also could not furnish the details of the expenditure incurred on her stay in UK. The details regarding the payment of scholarship of to Ms. Aarti Rai were also not disclosed and it was only after the AO asked the detail of the persons to whom scholarship had been paid that the name of Ms. Aarti Rai was revealed. The assessee has failed to furnish the names of other students who had been sent abroad to pursue higher studies on scholarship being awarded by the trust. No such resolution of the trust has also been placed either before AO as well as Ld. CIT(A). It is futile exercise on the part of the assessee to justify the benefit given to the persons specified u/s. 13. If the conscience of the assessee was clear then why it had not disclosed this fact in the audit report. Hence, there is a clear cut violation of the provisions of section 13 and accordingly, AO as well as Ld. CIT(A) has rightly denied the benefit of section 11. We note that scholarship given to Ms. Aarti Rai has been incurred in foreign currency and has been paid in UK i.e. to say the application of money has taken place outside India. For claiming exemption u/s. 11 the application of funds has to take place within India. Otherwise the approval of the Board is required which can grant exemption on the facts of each case. Thus in any case this income has not been applied in India and therefore not exempt. Further the trust is also hit by the provision of Section 13(1)(c). In view of the above, we are of the considered view that action of the Ld. CIT(A) in upholding the action of the AO in treating the scholarship given to Ms. Aarti Rai, as being in violation of provisions of section 13(1)© of the Act is correct one and the same does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the assessee.