The Supreme Court established clear guidelines for determining the income of deceased victims in motor accident compensation cases. It emphasized relying on the latest Income Tax Return (ITR) for salaried individuals and considering the average of up to the previous three years’ ITRs for self-employed persons. The Court highlighted the importance of ensuring fair compensation for victims and their families, stating that there is no fixed formula for assessing annual income under the Motor Vehicles Act.
In a specific case from Odisha, the Court addressed the appeal of the family of a deceased individual involved in a road accident. The Motor Accident Claims Tribunal (MACT) had initially assessed the victim’s annual income at Rs 15 lakh based on the latest ITR, leading to compensation of over Rs 2.27 crore. However, the Orissa High Court later adjusted the compensation amount after considering income from two ITRs and applying a lower multiplier.
The Supreme Court’s judgment emphasized the significance of ITRs as a reference point for income assessment but also stressed the need to account for the diverse nature of professions and businesses. It differentiated between salaried employees and self-employed individuals, stating that promotions and salary revisions are better reflected in the latest ITR for salaried persons, while an average of up to three years’ ITRs should be considered for self-employed individuals due to income fluctuations.
The Court cautioned against mechanically relying on ITRs filed post the claimant’s death or injury, noting that such returns might sometimes show inflated income. It highlighted the importance of considering various factors such as business nature, growth trajectory, and geographical location before determining a fair assessment of annual income. The Supreme Court’s decision in the Odisha case resulted in an enhanced compensation amount for the deceased victim’s family, emphasizing the need for a nuanced approach in income assessment for motor accident compensation cases.
