I am an Asst Professor working in a central university.
I was selected for an Indo-US fellowship of $3000/month for doing a research project in the U.S.
They have paid in INR to my university. In turn they released the above amount on a monthly basis and credited it to my State Bank of India account, in India.
During the research period absence has been treated as duty leave and paid full salary in addition to the above fellowship.
It is clarified by the funding body, that it is exempted u/s.10(16).
However my employer says it is taxable as there exists an employee & employer relationship and salary is being paid in addition to fellowship (but no where it is mentioned that the fellowships is sanctioned to meet the living expenses.)