Karamchari Union, Agra vs Union Of India & Ors

The Supreme Court ruled that City Compensatory Allowance (CCA), Dearness Allowance (DA), and House Rent Allowance (HRA) are taxable under the Income Tax Act, 1961, specifically under Section 17(3)(ii). The Court affirmed that these allowances are not reimbursements but rather advantages that constitute income, thereby falling within the taxable income framework. The judgment upheld the High Court's decision that these allowances are taxable and clarified their nature as perquisites under the Act.