Om Prakash, J. - (1.) The petitioners, broadly categorised as Central Government employees, employees of Central Government undertakings, bank employees, State Government employees and General Insurance employees, dispute the taxability of various allowances, namely, dearness allowance, city compensatory allowance, house rent allowance, leave encashment linked with leave travel concession, running allowance, night allowance, etc., in this batch of 20 writ petitions which, for the sake of convenience, are consolidated and disposed of together.
(2.) Sri V.B. Upadhyaya argued Writ Petition No. 328 of 1988 filed on behalf of the All India Defence Accounts Association, Poona (Allahabad Branch), and a few other writ petitions on behalf of the petitioners. As he advanced arguments at great length in regard to dearness allowance and house rent allowance, his arguments relating to these allowances were adopted by the other learned counsel for the petitioners.
(3.) The submission of Sri Upadhyaya is that these allowances do not amount to "income" under the provisions of the Income-tax Act, 1961 (hereinafter referred to as "the Act, 1961"), and, therefore, they are not liable to tax. Sri Upadhyaya being very firm in his submission that these allowances are not in the nature of income, no argument as an alternative was made to claim exemption under Section 10 of the Act, 1961, in respect of such receipts. So, the only question for consideration is whether the receipts on account of city compensatory allowance, house rent allowance and dearness allowance, are in the nature of income entailing tax liability.;