In Motor Accident Claims income must be determined on the basis of the income tax return, where available. – Supreme Court held that the ITR is a statutory document on which reliance may be placed to determine the annual income of the deceased.
ABCAUS Case Law Citation:
ABCAUS 3193 (2019) (12) SC
Important case law relied upon by the parties:
New India Assurance Company v Yogesh Devi (2012) 3 SCC 613
In the instant case, the appeal was filed by the heirs and legal representatives of a person who died in a motor accident.
The said appellants had filed a claim petition u/s 166 of the Motor Vehicles Act, 1988 (the Act) before the Tribunal, seeking compensation. However, the appellants were not satisfied by the award passed by the Tribunal which was much lower than what was claimed.
The appellants filed a first appeal before the High Court which by its impugned judgment estimated the income of the deceased at a reduced figure and the compensation awarded was reduced further.
The High Court concluded that on an analysis of the income tax returns filed by the deceased, the highest income declared for the given financial years must be taken as the annual income of the deceased. Thus arriving at the total income and applying a multiplier of 13, the loss of dependency was calculated. To this, funeral expenses, loss of consortium and loss of love and affection were added and thus total compensation to be awarded was worked out.
Aggrieved by the judgment of the High Court, the instant appeal was filed before the Hon’ble Supreme Court.
Assailing the reduction of the compensation, the appellants contended that:
(i) The High Court took precedence of income tax returns over other documents in the determination of annual income. Several documents demonstrating income from various sources, all of which were not disclosed in the income tax returns were ignored.
(ii) The High Court did not consider other contractual work awarded to the deceased and other solvency certificates of the deceased in the computation of his annual income;
(iii) Even assuming that the High Court was justified in taking the income reflected in the tax return as the determinant, the High Court erred in not accounting for the depreciation costs on fixed assets which had been reflected therein; and
(iv) The High Court ought to have calculated the monthly income of the deceased by taking into account the turnover from his trade and wine business.
In Motor Accident Claims income must be determined on the basis of ITRs where available
The Hon’ble Supreme Court observed that the Tribunal superimposed a possible value of income from agricultural land despite a clear indication in the income tax returns of the income from agricultural land. Therefore, the method adopted by the Tribunal was not sustainable in law. On the other hand, the High Court had proceeded on the basis of the income reflected in the income tax returns,
The Hon’ble Supreme Court expressed agreement with the High Court that the determination must proceed on the basis of the income tax return, where available. The income tax return is a statutory document on which reliance may be placed to determine the annual income of the deceased.
The Hon’ble Supreme Court also rejected the contention that depreciation costs on capital assets must be added to the income of the deceased. The Hon’ble Supreme Court stated that depreciation is the deduction allowed for the decline in the real value of tangible or intangible assets over its useful life. Its value varies over time and could not amount to tangible income for the purposes of computing annual income in a claim before the MACT.
Download Full Judgment Click Here >>
- Further extension of due date for filing of Form No. 10A/10AB to 30.06.2024 – CBDT Circular
- Revisionary order purportedly passed earlier but dispatched after written Submissions quashed
- Assessment u/s 147 based on seized material found during search of third party void ab-initio
- TDS deductors given relief for non deduction of TDS at higher rate for inoperative PANs
- Reassessment order quashed due to error in personal hearing video conferencing link
