Income tax must be deducted from the deceased’s income before calculating loss of dependency.

Ramesh Joshi, an Assistant Driller with the Directorate of Geology and Mining, died from injuries sustained when a truck struck his motorcycle. His wife and three children sought compensation under Section 166 of the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal awarded ₹59,83,703. The insurer appealed, challenging the Tribunal’s failure to deduct income tax and its deduction of only one-fourth, rather than one-third, of the deceased’s income for personal expenses.

Whether the Tribunal should have deducted one-third of the deceased’s income for personal expenses on the ground that one claimant was a major son.

Whether income tax should have been deducted from the deceased’s income when calculating loss of dependency.

Under Sections 166 and 173 of the Motor Vehicles Act, 1988, dependants or legal representatives may claim compensation, and an award may be challenged in appeal.

The Court applied Sarla Verma v. Delhi Transport Corporation, National Insurance Co. Ltd. v. Pranay Sethi, and Magma General Insurance Co. Ltd. v. Nanu Ram @ Chuhru Ram in assessing dependency, future prospects, multiplier, and conventional heads of compensation.

It treated income tax applicable to the relevant financial year as deductible from income when calculating loss of dependency.

The Court upheld the one-fourth deduction for personal expenses because there was no evidence that the major son lived separately; it treated him as part of the joint family. It also held that a major or earning child may be a legal representative under Section 166.

The deceased’s salary slips established gross annual income of ₹6,08,664. The Court added 15% for future prospects, calculated tax of ₹32,496 under the stated FY 2020–21 slabs, and deducted that amount before applying the one-fourth personal-expense deduction and multiplier of 11.

The one-fourth deduction for personal expenses was maintained, and the remaining terms of the Tribunal’s award were left unchanged.