509 KARMACHARI UNION, AGRA vs U.O.I. .

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 the High Court's decision that these allowances are not mere reimbursements but constitute taxable income as they are additional to salary and provide an advantage to employees. The judgment clarified that such allowances fall within the definition of salary and are subject to tax under the provisions of the Act.