Headline: Income tax component must be deducted from gross salary for determining dependency in motor accident claims.

The Appellant Insurance Company challenged an award dated 15th December 2014 passed by the MACT, South East, Saket.

The claim arose from a motor accident on 27th October 2013, where the deceased, a 23-year-old bachelor and employee of the Central Bank of India, was crushed by a Haryana Roadways Bus.

The Tribunal had awarded compensation of Rs. 70,09,804/- with 9% interest.

The Appellant contested the calculation of income regarding tax deductions and the choice of multiplier based on the age of the deceased rather than the mother.

1. Whether the Tribunal erred in failing to deduct income tax from the gross salary of the deceased while calculating the loss of dependency.

2. Whether the multiplier should be determined based on the age of the deceased or the age of the surviving dependents (mother).

3. Whether the non-pecuniary heads of compensation were in accordance with settled legal principles.

The Court applied the methodology established in Sarla Verma v. DTC (2009) 6 SCC 121, which standardized the choice of multiplier and deduction for personal expenses.

It further relied on National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680, which affirmed that the age of the deceased must be the basis for the multiplier and provided fixed amounts for conventional heads, namely Rs. 15,000/- for loss of estate, Rs. 15,000/- for funeral expenses, and Rs. 40,000/- per dependent for loss of consortium.

The Court observed that the Tribunal failed to deduct a tax component of Rs. 1,708/- from the gross monthly salary of Rs. 41,542/-, as evidenced by the pay slip Ex. PW-2/2. Consequently, the benchmark income was adjusted downward to Rs. 39,834/-.

Regarding the multiplier, the Court rejected the Appellant’s argument, holding that per Pranay Sethi, the age of the deceased (23 years) is the proper benchmark, justifying the multiplier of ‘18’.

The Court also modified the conventional heads to align with Pranay Sethi, deleting the "loss of love and affection" head and capping funeral and estate expenses at Rs. 15,000/- each, while awarding Rs. 80,000/- for loss of consortium for two respondents.

The Court partially allowed the appeal, reducing the total compensation from Rs. 70,09,804/- to Rs. 66,03,108/- at 9% interest, and directed the Appellant to deposit the balance revised amount within four weeks.