1989 (4) TMI 58 - HC - Income Tax

Summary

The High Court of Karnataka ruled that dearness allowance, additional dearness allowance, city compensatory allowance, and house rent allowance are taxable under the Income-tax Act as part of the "salary" of salaried employees. The amendment to section 2(24) of the Act clarified that special allowances granted to meet work-related or personal expenses are included in the definition of income. Therefore, all allowances received by salaried persons are taxable unless expressly exempted. The writ petition was dismissed as the allowances are considered part of the total income for income tax purposes.