Monday, 6 August 2018

Whether court can assess income of deceased for computation of compensation on basis of Income tax return?

REPORTABLE
We have given our anxious consideration to this
contention. There is no doubt that if the salary certificate is taken into
account the salary of the deceased should be taken as Rs. 1,06,176/-
since the gross salary was
Rs.8848 per month. That, however, in our view does not mean that
the income of the deceased as stated in the Income Tax return should
be totally ignored. It is not possible to agree with the observation of
the Tribunal that it was necessary for the claimants to “explain the said
contradiction” between two figures of income. The claimants had led
reliable evidence that the deceased had returned an income of Rs.
2,42,606/- for the assessment year 2004-05. This piece of evidence

has not been discredited. Indeed, it was possible that the deceased
had income from other sources also. There is nothing in the law which
requires the Tribunal to assess the income of the deceased only on the
basis of a salary certificate for arriving at a just and fair compensation
to be paid to the claimants for the loss of life.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (CIVIL) Nos. 7104-7105 OF
2016
UNITED INDIA INSURANCE CO. LTD.
Versus
INDIRO DEVI & ORS.
Coram:S.A. BOBDE, J.
Dated:JULY 03, 2018



The deceased was 39 years old. He was employed with the Food
Corporation of India (hereinafter referred to as ‘FCI’). He met with an
accident when the three-wheeler he was travelling in collided with a
rashly driven Canter truck and died. The claimants claimed
compensation before the Motor Accident Claims Tribunal (hereinafter
referred to as “Tribunal”).

2. These petitions arise from the order dated 27.08.2015 passed in
C.R. No. 408 of 2006 and the Civil Appeal FAO No. 4086 of 2005 by the
High Court of Punjab and Haryana at Chandigarh. The Insurance
Company is before us (hereinafter referred to as “the petitioner”) in
the instant petitions.
3. The Tribunal found that the accident occurred because of rash
and negligent driving and held the owner of the truck, the insurer and
the driver jointly and severally liable to pay the amount of
compensation determined.
4. The Tribunal passed an award of a sum of
Rs. 12,90,000/- in favour of the claimants recoverable @ 9% per
annum from the date of filing of claim petition, till its realization from
the respondents jointly and severally.
5. The issue in this case revolves around the income of the
deceased. On behalf of the accounts section of the employer of the
deceased, it was deposed that the deceased was getting Rs. 8848/- as
gross monthly salary. The deponent proved the salary certificate. The
amount of salary was not questioned. The Tribunal passed the award
on the basis that the salary he was receiving i.e. Rs. 8848/-.
6. The Tribunal did not take into account the fact that the Income
Tax Returns of the deceased showed an income of Rs. 2,42,606/- per
annum for the assessment year 2004-05 and Rs. 2,17,130 for the
2
assessment year 2003-04. The Tribunal held that the claimants had
not led any evidence to explain the contradictions between the two
figures of income emerging from the evidence of the employer of the
deceased and the income tax record, and passed the award relying on
the salary certificate issued by the employer of the deceased.
7. In a revision carried to the High Court by the Insurance Company
and appeal by the claimants, the High Court took the income of the
deceased as found in the income tax assessment and provided for 50%
increase as future prospect. The High Court applied the lower
multiplier of 15 instead of 16 and after making a deduction of 1/4th for
the personal expenses, increased the compensation to Rs. 44,03,980/-
with interest @ 7.5% per annum from the date of petition till the date
of payment. The amount payable was tabulated as follows:-
FATAL ACCIDENTS
Date of accident
27.2.2004
Age 39 years
Occupatio
n
Employee in FCI 8848/-
Claimants Widow, 4 children and mother
Heads of claim Tribunal High Court
Sl.No. Amount
(Rs.)
Amount (Rs.
1. Income 10,000
(monthly)
2,42,606
(annual)
2. Add, % of increase 50% 3,63.909
3. Less, Deduction 2,72,932
4. Multiplicand (annualized by
multiplying 12)
80,000 2,72,932
5. Multiplier 16 15
6. Loss of dependence 12,80,000 40,93,980
7. Medical Expenses & Transportation
3
8. Loss of Consortium & funeral
expenses
10,000 1,00,000
9. Loss of love and affection 2,00,000
10. Loss to estate 5000
11. Funeral expenses 5000
Total 12,90,000 44,03,980
8. It was argued before us on behalf of the petitioner that the
High Court has committed a gross error and perversity in taking into
account the income of the deceased as per the income tax returns.
According to the petitioner, the income of the deceased was Rs. 8848
per month, i.e. the amount according to the salary certificate of the
deceased and the High Court ought to have relied upon the salary
certificate for the calculation of the compensation.
9. We have given our anxious consideration to this
contention. There is no doubt that if the salary certificate is taken into
account the salary of the deceased should be taken as Rs. 1,06,176/-
since the gross salary was
Rs.8848 per month. That, however, in our view does not mean that
the income of the deceased as stated in the Income Tax return should
be totally ignored. It is not possible to agree with the observation of
the Tribunal that it was necessary for the claimants to “explain the said
contradiction” between two figures of income. The claimants had led
reliable evidence that the deceased had returned an income of Rs.
2,42,606/- for the assessment year 2004-05. This piece of evidence

has not been discredited. Indeed, it was possible that the deceased
had income from other sources also. There is nothing in the law which
requires the Tribunal to assess the income of the deceased only on the
basis of a salary certificate for arriving at a just and fair compensation
to be paid to the claimants for the loss of life.
10. In the circumstances, we see no reason to interfere with
the judgment of the High Court. The SLPs are accordingly dismissed.
….………………………………..J.
[S.A. BOBDE]
….………………………………..J.
[L. NAGESWARA RAO]
NEW DELHI
JULY 03, 2018

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