Motor accident compensation must be based on gross salary, deducting only applicable income tax.

The appellants, the deceased Petchiammal’s claimants, appealed the Tribunal’s award of ₹76,24,493 for her death in a motor accident on 10 March 2021.

They sought enhancement, contending that the Tribunal had wrongly calculated her income using her net salary of ₹79,474 rather than her gross salary as a school headmistress.

The High Court considered the salary evidence, applicable deductions, future prospects, multiplier and conventional heads of compensation.

Whether the deceased’s income for computing loss of dependency should be based on her gross salary rather than her take-home salary, subject to deduction of income tax.

Whether the Tribunal’s compensation award should be enhanced by recalculating loss of dependency and applying the relevant principles on future prospects, multiplier and personal expenses.

Under the Motor Vehicles Act, 1988, compensation for death is assessed by determining the deceased’s income and calculating the resulting loss of dependency; an appeal from a Claims Tribunal award lies under Section 173.

Relying on Helen C. Rebello v. Maharashtra State Road Transport Corporation, (1999) 1 SCC 90, and Vimal Kanwar v. Kishore Dan, 2013 (1) TN MAC 641 (SC), the Court held that benefits such as provident fund, pension and insurance are not pecuniary advantages deductible from compensation, while income tax payable is deductible.

Under National Insurance Co. Ltd. v. Pranay Sethi, 2017 (16) SCC 680, future prospects are added as applicable; under Sarla Verma v. Delhi Transport Corporation, AIR 2009 SC 3104, the multiplier and deduction for personal and living expenses are determined by reference to the deceased’s age and the number of dependants.

The Court held that the Tribunal erred in using the deceased’s take-home pay because non-tax salary deductions were not to be treated as deductions from income for the dependency calculation.

It fixed her monthly income at ₹94,474, added 15% for future prospects, and deducted the stated income tax of ₹1,15,178 from the annual income.

Applying multiplier 11 and deducting one-third for personal expenses, the Court assessed loss of dependency at ₹87,16,122; it left unchanged the awards for loss of love and affection, funeral expenses and loss of estate.

The judgment’s paragraph 10 states a total of ₹87,16,122, but its compensation table and operative order state ₹88,66,122, reflecting the addition of the other heads to the loss-of-dependency amount.

The respondents were directed to deposit the modified amount, after crediting sums already deposited, within four weeks.

The Court apportioned ₹18,66,122 to the first claimant and ₹35,00,000 each to the second and third claimants; the parties were directed to bear their own costs.