ITR-filing and declared income of a family business member constitute valid basis for assessing loss of earning capacity.

On March 12, 2010, the claimant, Palak Sharma (a 22-year-old BBA student), was riding pillion on a two-wheeler when he was hit by an Innova driven rashly and negligently

The accident left the claimant in a permanent vegetative state with 100% disability

The Motor Accident Claims Tribunal (MACT) awarded a total compensation of Rs. 1,62,93,344/-, assessing his income based on ITRs filed for a family scrap business

The Insurance Company appealed the award, contesting the validity of the income proof (arguing it was a joint family business with no personal loss of income) and the calculation of future prospects and attendant charges

1. Whether the income reflected in the ITRs of a student engaged in a joint family business can be treated as personal loss of income for compensation

2. Whether the Tribunal erred in awarding 50% future prospects instead of 40% for a self-employed individual

3. Whether the non-pecuniary damages awarded by the Tribunal were just and reasonable given the claimant's vegetative state

The court applied the principles of the Motor Vehicles Act regarding "just compensation."

It relied on Amrit Bhanushali & Ors. v. National Insurance Company & Ors. to validate ITRs as evidence of income

Regarding future prospects, the court followed the mandate in National Insurance Company v. Pranay Sethi & Ors., which fixed 40% for self-employed individuals under the age of 40

For the assessment of non-pecuniary damages in cases of catastrophic injury, the court applied the framework from R.D. Hattangadi v. Pest Control (India) (P) Ltd.

and Kajal v. Jagdish Chandra & Ors.

The Court rejected the appellant's argument that the claimant had no independent income, noting that a progeny joining a family business and filing independent ITRs is a recognized social reality; the source of income being a family business does not negate financial independence

However, the Court modified the future prospects from 50% to 40% to align with the Pranay Sethi precedent for self-employed victims

Addressing the claimant's condition, the Court found the Insurance Company's challenge to medical expenses "frivolous," noting the claimant remained bedridden with 100% disability for 14 years

The Court determined that the original non-pecuniary awards for pain, suffering, and loss of amenities were insufficient given the total loss of a "regular prosperous life" and the irreversible deprivation of marriage and education prospects

The Court reduced the future prospects to 40% but significantly enhanced non-pecuniary damages (Pain & Suffering, Loss of Education, Loss of Amenities, and Marriage Prospects) to Rs. 5,00,000 each

The Insurance Company was directed to deposit the balance amount with 7.5% interest per annum from the date of petition within six weeks