Compensation awarded under the Motor Vehicles Act is essentially capital in nature, serving as restitution for loss of dependency or life, and is not taxable income; therefore, deducting income tax from the gross income of victims during compensation calculation is impermissible.

(Judgment of the Court was delivered by K.K.RAMAKRISHNAN,J.)

The appellant–Insurance Company has filed the present Civil Miscellaneous Appeal challenging the award passed in M.C.O.P. No.51 of 2021 by the Motor Accidents Claims Tribunal (II Additional District and Sessions Judge), Tuticorin, by judgment dated 04.01.2025. The challenge is confined to the quantum of compensation alone.

2.The case of the claimants is as follows:

The deceased, Arumugam, was working as a Senior Audit Officer in the office of the Director General of Audit, Chennai, and was aged about 56 years at the time of the accident. On 19.09.2019, at about 21:15 hours, while he was walking on the left side of the road from north to south at Palakarai in Perambalur District, the bus bearing Registration No.TN-46-D-3535, insured with the appellant, which was proceeding in the same direction from Tiruchirappalli to Perambalur, was driven in a rash and negligent manner and hit the deceased. The bus ran over his head, and he died on the spot due to the injuries sustained. A criminal case in Crime No.559 of 2019 was registered on the file of Perambalur Police Station under Sections 279 and 304-A IPC against the driver of the bus.

2.1.The dependants of the deceased, namely his wife and two daughters, filed a claim petition in M.C.O.P.No.51 of 2021 seeking compensation of Rs.1,50,00,000/-. The appellant–Insurance Company filed a counter statement denying the manner of the accident, negligence, and the quantum of compensation claimed.

2.2.Before the Tribunal, the claimants examined P.W.1 and P.W.2 and marked Exs.P1 to P27. On the side of the appellant–Insurance Company, neither oral nor documentary evidence was adduced.

3.Findings of the Tribunal:

Upon consideration of the evidence on record, particularly the testimony of P.W.2, the Tribunal held that the accident occurred due to the rash and negligent driving of the driver of the insured bus and fixed the liability on the appellant. With regard to quantum, the Tribunal, based on the salary certificate, fixed the monthly income of the deceased at Rs.1,47,187/- and, by applying the settled principles governing computation of compensation, awarded a total sum of Rs.1,23,57,044/- on the following heads:

with interest at 7.5% per annum from the date of petition till the date of realisation. Aggrieved by the same, the appellant–Insurance Company has preferred the present appeal, admitting liability but challenging the quantum on the sole ground that the Tribunal failed to deduct income tax from the salary of the deceased while computing compensation.

4.Submission of the learned counsel appearing for the appellant:

The learned counsel would also submit there was no deduction towards the income tax and hence, learned Tribunal Judge has committed error in awarding the compensation and therefore, he seeks to reduce the compensation.

5. This Court considered the submission made by the learned counsel appearing for the appellant and perused the materials available on record.

6. The following point arises for consideration of this appeal:

Whether the Tribunal was justified in computing the income of the deceased without deducting income tax?

7.Findings:

The similar issue was raised before this Court in C.M.A.(MD).No.426 of

2026, and this Court after an elaborate discussion and by placing reliance on the judgments of the Hon’ble Supreme Court, rejected the contention that income tax must invariably be deducted while computing the monthly income of the either deceased or injured in the motor accident compensation cases and the relevant paragraphs are as follows:

8.2.With regard to the second contention relating to deduction of income tax, this Court is unable to accept the submission made by the learned counsel for th