Supreme Court Relies on Income Tax Returns to Increase MACT Compensation to Rs.24.53 lakh

A bench of Justices Sanjay Karol and Manmohan heard an appeal against a judgment of the High Court of Karnataka in an MACT claim arising from a fatal road accident, challenging the calculation of the deceased's annual income and the quantum of compensation awarded to the claimant-wife.

The Court allowed the appeal, held that the income of the deceased must be determined having regard to the Income Tax Return when available, and recalculated compensation accordingly. The bench observed that statutory documents such as tax returns could not be ignored and relied on this principle to fix the deceased's annual income at Rs.1,98,192. The Court, in its reasoning, observed: “It has been clarified in Malarvizhi & Ors. v. United India Insurance Co. Ltd. & Ors. that the determination of income must proceed on the basis of Income Tax Return when available, being a statutory document. ... ‘Monthly income could be fixed taking into account the tax returns only if the details of payment of tax are appropriately brought into evidence so as to enable the Tribunal/Court to calculate the income in accordance with law.’” The Court modified the award of the Motor Accidents Claims Tribunal and increased the total compensation payable to the claimants from Rs.13,91,300 to Rs.24,53,280, directing that interest be paid as awarded by the Tribunal.

Background

The dispute arose from a collision on 30 September 2012 in which the deceased, Vivekananda Shenoy (aged 47), riding a motorcycle, was struck by a bus and succumbed to injuries on 3 October 2012. The appellant, the deceased’s wife, filed a claim petition seeking Rs.1 crore in compensation, alleging the deceased was the sole earning member and earned up to Rs.5,00,000 per annum according to Income Tax Returns. The Motor Accident Claims Tribunal assessed the deceased’s annual income at Rs.90,000 and awarded Rs.13,91,300 with interest at 6% per annum. The claimants appealed to the High Court of Karnataka, which dismissed the appeal and held there was no scope for enhancement.

Leave was granted by this Court. The principal challenge before the Supreme Court concerned the method of computing the deceased’s income and whether Income Tax Returns could be accepted as proof of income. The bench referred to this Court’s precedents, including Malarvizhi and the recent decision in New India Assurance Co. Ltd. v. Sonigra Juhi Uttamchand, which qualified the use of tax returns by requiring that details of payment of tax be brought into evidence to enable proper calculation.

On review of the deceased’s Income Tax Return for the financial year 2012–13 (annexed as Annexure P2), the Court noted a gross total income of Rs.1,98,192 per annum and fixed the income at that figure. Applying established principles for future prospects and deductions, the Court applied 25% for future prospects (resulting in Rs.2,47,740), deducted one-third for personal and living expenses (resulting in Rs.1,65,160), and used a multiplier of 13 for the age of the deceased. The Court added heads for medical expenses (Rs.1,73,100), loss of estate (Rs.18,150), funeral expenses (Rs.18,150) and loss of consortium (two entries of Rs.48,400), arriving at a total compensation of Rs.24,53,280. The Civil Appeal was allowed and the impugned award dated 14 August 2015 was modified in terms of the recalculation; interest was directed to be paid as awarded by the Tribunal. No interim directions beyond those recorded were necessary, and pending applications stood disposed of.

Case Details: Case No.: CIVIL APPEAL NO. 2320 OF 2025 (Arising out of SLP(C) No. 12067/2024) Case Title: Vijayalaxmi @ Roopa v. Shenoy & Anr. Appearances: (List advocates if available, for both sides using the format) For the Petitioner(s): Not indicated in the judgment text For the Respondent(s): Not indicated in the judgment text