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of <h1>Allahabad High Court Rules City Compensatory Allowance Not Tax-Exempt u/s 10(14), Reversing Prior Instructions.</h1> The circular addresses the tax exemption under Section 10(14) of the Finance Act, 1975, specifically regarding allowances for personal expenses related to employment location. The amendment aimed to counteract a Bombay High Court decision by clarifying that such allowances do not qualify for tax exemption. The Allahabad High Court ruled that City Compensatory Allowance (CCA) is not deductible under Section 10(14) as it is based on location rather than job duties. Consequently, previous instructions to delay appeals on CCA taxability are revoked, and tax officers are advised to use this ruling in proceedings, potentially escalating conflicts between court decisions to the Supreme Court.
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