Motor accident compensation must deduct income tax and one-fourth personal expenses where six dependants survive.

On 9 October 2026, Lukman was travelling in his Tavera car near Thana Biharigarh, District Saharanpur, when a truck allegedly being driven on the wrong side collided with the car.

Lukman sustained injuries and subsequently died during treatment at Indiresh Hospital, Dehradun.

His widow and five children filed a claim petition seeking compensation of ₹90,00,000 under the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal partly allowed the claim and awarded ₹89,06,596.

The Oriental Insurance Company challenged the assessment of income and deductions in Appeal From Order No. 514 of 2012, while the claimants filed Appeal From Order No. 426 of 2012 seeking enhancement.

Whether the Tribunal correctly assessed the deceased’s income for computing the loss of dependency, particularly in light of the Income Tax Returns produced by the claimants?

Whether income tax and personal and living expenses were correctly deducted from the deceased’s income?

Whether the multiplier and amounts awarded under the conventional heads were legally and factually appropriate?

Whether the compensation awarded by the Tribunal required modification and, consequently, whether the claimants’ appeal for enhancement could be allowed?

The appeal was considered under Section 173 of the Motor Vehicles Act, 1988, which permits an appeal against an award of a Claims Tribunal.

For assessing loss of dependency, the Court relied on the principles stated in Sarla Verma v. Delhi Transport Corporation, including the use of the appropriate multiplier and deduction of one-fourth of the income towards personal and living expenses where the deceased leaves six dependants.

The Court further applied the principle that the deceased’s actual taxable income must be determined after deducting applicable income tax from the assessed gross income.

It awarded amounts under the conventional heads of consortium, funeral expenses and loss of estate.

The Court reassessed the deceased’s income on the basis of the Income Tax Returns for the assessment years 2005–06 and 2006–07, which disclosed annual incomes of ₹7,19,273 and ₹10,95,457 respectively.

Taking their average, the Court determined the gross annual income as ₹9,07,365.

It deducted ₹1,52,209 towards income tax, resulting in a net annual income of ₹7,55,156.

Since the deceased left behind six dependants, the Court applied the Sarla Verma principle and deducted one-fourth, or ₹1,88,789, towards personal expenses, thereby fixing the annual loss of dependency at ₹5,66,367.

Applying a multiplier of 14, the loss of dependency was calculated at ₹79,29,138.

The Court then added ₹2,40,000 towards consortium at ₹40,000 for each of the six claimants, ₹15,000 for funeral expenses and ₹15,000 for loss of estate, producing total compensation of ₹81,99,138.

On this basis, the Tribunal’s award was found excessive and liable to be reduced.

The Tribunal’s award of ₹89,06,596 was reduced to ₹81,99,138.

The claimants’ connected appeal seeking enhancement was disposed of accordingly.

The modified compensation was directed to carry interest at 6% per annum from the date of filing of the claim petition until realization.

The Insurance Company was directed to deposit the balance amount within six weeks, after adjustment of any amount already deposited, with disbursement to follow the Tribunal’s original directions.