From RFC 1034 – Domain names – concepts and facilities:
Domain names in RRs which point at another name should always point at
the primary name and not the alias. This avoids extra indirections in
accessing information. For example, the address to name RR for the
above host should be:52.0.0.10.IN-ADDR.ARPA IN PTR C.ISI.EDUrather than pointing at USC-ISIC.ARPA. Of course, by the robustness
principle, domain software should not fail when presented with CNAME
chains or loops; CNAME chains should be followed and CNAME loops
signalled as an error.
So yes, it is allowed and properly written software will handle it just OK. CNAME chains aren’t however considered good practice and impose an overhead on the infrastructure.
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