Whether court can ignore the salary stated in the Income tax return while calculating the compensation under Motor Vehicles Act,1988

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Shubham Budhiraja[1]

 

Mr. A running a business of scrap material has died in a road accident. As per his ITR, he earns Rs.10,000/- per month. The Motor accident claim tribunal (MACT) quantified the salary of the deceased as Rs. 4,000/- as skilled labour ignoring his Income tax returns for reason that there's only one ITR. The High Court confirmed the same. The Hon’ble Supreme Court while enhancing the compensation has held that Income Tax Return is a statutory document on which reliance be placed, where available, for computation of annual income[2].

 

 

(I)                   The provisions of the Motor Vehicles Act, 1988 gives paramount importance to the concept of ‘just and fair’ compensation. It is a beneficial legislation which has been framed with the object of providing relief to the victims or their families. Section 168 of the MV Act deals with the concept of ‘just compensation’ which ought to be determined on the foundation of fairness, reasonableness and equitability.

 

(II)                 This court in Malarvizhi & Ors. Vs. United India Insurance CO. Ltd. & Ors., (2020) 4 SCC 228 has reaffirmed that the Income Tax Return is a statutory document on which reliance be placed, where available, for computation of annual income.

 

(III)              Although such determination can never be arithmetically exact or perfect, an endeavour should be made by the Court to award just and fair compensation irrespective of the amount claimed by the applicant/s.

 

(IV)               While calculating the compensation, the courts should take into consideration not only the actual income at the time of the death but should also make additions by taking note of future prospects.

 


[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com , +91-9654055315, Member, Legal Aid Committee-Bar Council of Delhi [2022-23], Member, Research Committee- NIRC ICSI [2021-2022], Secretary- NGO Shaura Ek Samman (Regd.)

[2] Smt. Anjali v. Lokendra Rathore, Civil Appeal No. 9014 of 2022, Judgment dated 06/12/2022

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