Gujarat HC Reassesses ITR to Enhance Motor Accident Compensation

The Gujarat High Court has enhanced compensation awarded to the family of a deceased mechanical engineer after holding that latest income-tax returns and post-tax income must be given primacy while computing just compensation under the Motor Vehicles Act. The bench of Justice Hasmukh D. Suthar observed that the deceased had filed income-tax returns for multiple assessment years, showing a clear upward trend in income. The Court held that the Tribunal erred in ignoring the latest return reflecting higher earnings and emphasized that income tax paid must be deducted to arrive at actual annual income. The case arose from a fatal road accident dated January 24, 2016, in which a 25-year-old mechanical engineer lost his life following a head-on collision between his Activa scooter and a motorcycle at Chandreshnagar Main Road, Rajkot. The deceased’s legal heirs had approached the Motor Accident Claims Tribunal (MACT), Rajkot, seeking compensation. By its award dated August 23, 2024, the Tribunal held the motorcycle rider 60% negligent and attributed 40% contributory negligence to the deceased. The Tribunal assessed compensation at ₹34.96 lakh, prompting the claimants to file an appeal seeking enhancement and challenging the finding on negligence. A key issue before the High Court was the correct assessment of the deceased’s income, particularly the Tribunal’s approach in averaging income from earlier years instead of relying on the most recent income-tax returns filed prior to the accident. Relying on recent Supreme Court jurisprudence, the High Court ruled that income-tax returns filed close to the date of accident are reliable indicators of earning capacity. Post-tax income, not gross income, should form the basis for compensation. Returns filed after the accident cannot be discarded merely due to timing, if they relate to a period prior to death Accordingly, the Court reassessed the deceased’s annual post-tax income at ₹4.74 lakh, after deducting income tax of ₹25,720. Considering the deceased’s young age (25 years) and professional qualification in mechanical engineering, the Court allowed an addition of 40% towards future prospects, enhancing the annual income for compensation purposes to ₹6.63 lakh. After deducting personal expenses and applying the multiplier of 18, the Court recalculated the loss of dependency at ₹79.64 lakh, a substantial increase over the Tribunal’s computation. While enhancing compensation, the High Court declined to interfere with the finding of 40% contributory negligence attributed to the deceased. The Court noted that the accident involved a head-on collision on a wide main road, and both riders failed to exercise due caution. Under various heads, including loss of dependency, consortium, loss of estate, and funeral expenses, the total compensation was reassessed at ₹81.45 lakh. After deducting 40% towards contributory negligence, the final payable amount was fixed at ₹48.87 lakh, resulting in an enhancement of ₹13.90 lakh over the Tribunal’s award. The High Court also upheld the Tribunal’s direction of “pay and recover”, requiring the insurance company to first pay the compensation to the claimants and then recover the amount from the owner of the offending motorcycle. The Court reiterated that this principle ensures victims are not left uncompensated due to inter se disputes between insurer and vehicle owner. Case Details Case Title: Jasminaben W/O Mayurbhai Dhadiya & Ors. Versus Bharatbhai Arjanbhai Sarvaiya Since Decd Case No.: R/FIRST APPEAL NO. 3685 of 2024 Date: 22/12/2025 Counsel For Petitioner: HEMAL SHAH Counsel For Respondent: KRUNAL R SAKSENA Click Here To Read Order Read More: No Cause of Action Arose in West Bengal: Calcutta HC Refuses to Entertain Challenge to DGTR Anti-Dumping Findings

Gujarat HC Reassesses ITR to Enhance Motor Accident Compensation

Membership Required

Latest articles

Gujarat High Court Grants Bail to CGST Superintendent in ₹20 Lakh GST Bribery Case

JURISHOUR | TAX LAW DAILY BULLETIN : 03 AUGUST, 2026

Stereotyped Eyewitness Testimony and Medical Contradictions Justify Acquittal: Supreme Court Refuses to Restore Conviction

Revenue Records Showing Shamilat Deh Prevail Over Private Ownership Claims: Supreme Court

More like this

Gujarat High Court Grants Bail to CGST Superintendent in ₹20 Lakh GST Bribery Case

JURISHOUR | TAX LAW DAILY BULLETIN : 03 AUGUST, 2026

Stereotyped Eyewitness Testimony and Medical Contradictions Justify Acquittal: Supreme Court Refuses to Restore Conviction

About us

Company

Categories