Holding

For self‑employed/deceased persons, the Court must take the average of up to three preceding years' Income Tax Returns, subject to relevant business circumstances, to determine annual income for compensation under the Motor Vehicles Act.

Summary

Manoranjan Pandey, a 39‑year‑old construction contractor and sole breadwinner, died in a road accident on 29 May 2018. His legal representatives filed a claim under Section 166 of the Motor Vehicles Act, 1988, and the Motor Accident Claims Tribunal awarded Rs 2.27 crore based on the deceased’s income tax return (ITR) for the preceding year of Rs 15 lakh. The insurer appealed, and the Orissa High Court reduced the income to the average of two ITRs (Rs 13.33 lakh) and applied a multiplier of 15, cutting compensation to Rs 1.87 crore. The Supreme Court was asked whether the income of a self‑employed deceased should be assessed on the basis of the immediate prior year’s ITR or an average of the past two to three years. The Court held that for self‑employed persons the average of up to three preceding years’ ITRs, together with relevant business factors, must be used, and fixed the annual income at Rs 14 lakh, resulting in compensation of Rs 1.97 crore. The appeal was allowed and the award was modified accordingly.

Issues considered

Whether, for assessing the annual income of a deceased or claimant who was self‑employed, the previous year's Income Tax Return alone is sufficient or the average of the past two/three years' ITRs should be considered under the Motor Vehicles Act, 1988.

Legislation cited

Indian Penal Code, 1860s. 279, s. 304-A, s. 337, s. 338
Motor Vehicles Act, 1988s. 166, s. 168

Headnote

Issue for Consideration Issue arose that for assessing the annual income of a deceased person or claimant under the Motor Vehicles Act, the ITRs for the previous year appropriate or average of the past two/three years to be Headnotes† Motor Vehicle Act, 1988 – s.166 – Compensation – Computation of annual income of the deceased victim on the basis of ITRs – Victim aged 39 years, sole breadwinner, running his own construction business, met with a road accident and succumbed to his

Subjects

Assessment of annual income of deceasedIncome Tax ReturnsAverage of past two/three yearsCompensation under Motor Vehicles ActSelf‑employed income assessmentConstruction businessMultiplier for ageJust and fair compensation

Judgment

[2026] 7 S.C.R. 494 : 2026 INSC 661

Rashmirekha Tripathy and Anr.
v.
The Branch Manager (Legal Claims), Sriram General
Insurance Company Limited and Ors.
(Civil Appeal No. 8735 of 2026)
01 July 2026
[Sanjay Karol* and Nongmeikapam Kotiswar Singh, JJ.]

Issue for Consideration
Issue arose that for assessing the annual income of a deceased
person or claimant under the Motor Vehicles Act, the ITRs for the
previous year appropriate or average of the past two/three years
to be taken into consideration.

Headnotes†
Motor Vehicle Act, 1988 – s.166 – Compensation – Computation
of annual income of the deceased victim on the basis of
ITRs – Victim aged 39 years, sole breadwinner, running his
own construction business, met with a road accident and
succumbed to his injuries – Tribunal ascertained his income
at Rs.15 lakhs pa considering his previous year’s ITR and
awarded Rs.2.27 crores – However, the High Court reduced
the compensation to Rs.1.87 crores taking the average of the
previous two ITRs on record, instead of only the previous
ITR – Correctness:
Held: ITRs being a statutory document are an important reference
point when it comes to assessing one’s income, for the purposes
of compensation under the Motor Vehicle Act – There must be a
bifurcation made between salaried individuals and self-employed
individuals when it comes to assessment of annual income – For
salaried individuals, only the ITR of the previous year will be
sufficient for showcasing the annual income from salary since the
financial impact of promotions is significant and may be reflected
in the ITR for only that year – When it comes to self-employed/
individuals carrying out their own business, the average of the income
specified in the ITRs of up to the previous three years is to be taken
as a reference point for assessment of annual income from their
business – Where only one or two ITRs have been filed, and there
* Author
[2026] 7 S.C.R. 495

Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims),
Sriram General Insurance Company Limited and Ors.

is fluctuation of income, surrounding circumstances-nature of the
business; growth pattern of the business; impact of death on the
business; potential growth of business; negative income, to be taken
into consideration – Date when the ITRs are filed would also become
a relevant consideration, as there may be scenarios where inflated
income is showcased after death/injury – In these circumstances, the
surrounding factors of the business would become more relevant –
However, if sufficiently supported by financial statements, such
ITRs may be taken into consideration – On facts, the appellants
brought on record two ITRs for AY 2017-18 and AY 2018-19, and
High Court took the average of these to assess the annual income
of the deceased as Rs.13,33,226/- – No reference made to other
factors relating to the nature of business – Thus, with a view to
awarding just and fair compensation, his annual income is fixed as
Rs.14,00,000/- – In view thereof, the compensation payable to the
appellants would be Rs.1,97,81,505 – Impugned award modified
accordingly. [Paras 17-23]

Case Law Cited
ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty
and Anr. [2018] 3 SCR 42 : (2018) 3 SCC 686; V. Pathmavathi
and Ors. v. Bharthi Axa General Insurance Co. Ltd. and Anr., 2026
INSC 131 : 2026 SCC OnLine SC 158; Anant v. Pratap and Anr.
[2018] 10 SCR 11 : (2018) 9 SCC 450 – referred to.

List of Acts
Penal Code, 1860; Motor Vehicle Act, 1988.

List of Keywords
Assessment of the annual income of deceased person or claimant;
ITRs for the previous year or average of the past two/three years;
Compensation; Computation of annual income of the deceased
victim on the basis of ITRs; Construction business; Previous year’s
ITR; Average of the previous two ITRs.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8735 of 2026
From the Judgment and Order dated 25.04.2024 of the High Court
of Orissa at Cuttack in MACA No. 452 of 2023
496 [2026] 7 S.C.R.

Supreme Court Reports

Appearances for Parties
Advs. for the Appellant(s):
Kedar Nath Tripathy, Aditya Narayan Tripathy, Chand Qureshi,
Mujahid Ahmad, Md.Imran Siddiqui, Ms. Preeti Chauhan, Mrs.
Arpana Soni, Mrs. Parveen Qureshi, Mohit Yadav, Mrs. Aarti Pal,
M.Tajdar Siddiqui, Saaket Jain, Ms. Shivangi Anand, Siddhartha
Iyer, Chhatresh Kumar Sahu.
Advs. for the Respondent(s):
Kshitij Mittal, Anand Sukumar, Salil Paul, Sahil Paul, Ms. Manjeet
Chawla, Sandeep Dayal, Ms. Kiran Bala Agarwal, Hritik Sejwal.

Judgment / Order of the Supreme Court

Judgment

Sanjay Karol, J.

1. Leave granted.
2. This appeal is directed against the judgment and order dated
25.04.2024 passed in MACA No. 452 of 2023 by the High Court of
Orissa at Cuttack, which, in turn was preferred against the order
dated 24.02.2023 in MAC Case No. 92/2019 by the Motor Accident
Claims Tribunal1, Behrampur2.
3. The brief facts giving rise to this appeal are that on 29.05.2018, the
deceased, namely Mr. Manoranjan Pandey, aged 39 years, was
travelling from Behrampur to Bhubaneswar in his vehicle bearing
registration number OD-02H-7929. Near Kaliabali Chakka on the
National Highway, the offending vehicle, a truck bearing registration
number AP-05TD-2112, being driven in a rash and negligent manner,
struck the vehicle of the deceased. As a result of the said accident,
he suffered injuries and passed away during treatment.
4. In connection with the same, an FIR came to be registered at
Chamakhandi Police Station, bearing number Case No. 55/2018,
under Sections 279, 337, 338, 304-A of the Indian Penal Code, 1860.

1 Hereinafter ‘MACT’.
2 Hereinafter ‘the Tribunal’.
[2026] 7 S.C.R. 497

Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims),
Sriram General Insurance Company Limited and Ors.

5. An application seeking compensation was filed by the claimant-
appellants, being the legal representatives of the deceased, before
the Tribunal under Section 166 of the Motor Vehicle Act, 1988, to the
tune of Rs.2,25,00,000/-. It was stated therein that the deceased was
running his own construction business and earning Rs. 15,00,000/-
per annum. He was the sole breadwinner of his family.
6. The Tribunal, vide its order dated 24 th February, 2023, held
Respondent No.2, Insurance Company, liable to pay a compensation
of Rs. 2,27,00,064/- along with 6% interest per annum, to the
claimant-appellants from the date of filing of the claim petition i.e.,
from 7th May 2019. The income of the deceased was ascertained
as Rs. 15,00,000/- per annum considering his Income Tax Return3
for the Assessment Year4 2018-19. A deduction of 1/3rd was made
considering 3 dependents and a multiplier of ‘16’ was applied,
considering the age of the deceased. The Tribunal further awarded
compensation towards conventional heads, in accordance with law.
7. Aggrieved thereof, Respondent No. 2 the Insurance Company filed
an appeal before the High Court seeking reduction in compensation
awarded by the Tribunal. It was submitted therein that the Tribunal
erred in computing the income of the deceased and applied the wrong
multiplier, as the age of the deceased was 39 as per his PAN card.
8. The High Court, vide, the impugned judgment, allowed the appeal
and reduced the compensation awarded by an amount of Rs.
39,24,914/- to Rs. 1,87,75,150/- along with 6% interest per annum.
The Court reduced his annual income as Rs. 13,33,226/-. For this
purpose, the Court took the average of the previous two ITRs which
were on record, instead of only the previous ITR, which was taken
into consideration by the Tribunal. Furthermore, the Court applied
a multiplier of 15.
9. Dissatisfied, the claimant-appellants are now before us. The significant
ground of challenge taken is that the Courts below, have erred in
assessing the income of the deceased.
10. We have heard the learned counsel for the parties.

3 Hereinafter ‘ITR’.
4 Hereinafter ‘AY’.
498 [2026] 7 S.C.R.

Supreme Court Reports

11. The issue which arises before this Court is whether for assessing the
annual income of a deceased person or claimant under the Motor
Vehicles Act 1988, the ITRs for the previous year is appropriate or
average of the past two/three years is to be taken into consideration?
12. In view of the importance of the issue involved, vide order dated
07.02.2025, this Court appointed Mr. J.R. Midha, learned senior
counsel and Mr. Salil Paul, learned counsel as amicus curiae, both
experts in this field, to assist in this matter.
13. Mr. J.R. Midha, learned senior counsel, has submitted that there is
no uniformity in the principles relating to the computation of annual
income on the basis of ITRs. Some Courts take the average of the
last three years, whereas some Courts take the last return filed to
assess the income of the deceased. He further submitted that while
the ITR is the prima facie evidence of the deceased’s income, it does
not always reflect the true income of the deceased. Factors such
as business income pattern, growth pattern and nature of business5
also warrant consideration. Moreover, in cases where the ITR has
been filed after the death, it would be appropriate to call for the ITRs
for the past three years along with balance sheets of the concerned
person/entity.
14. Mr. Salil Paul, learned amicus curiae has submitted that this Court in
ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty
and Anr.6 relied upon the average income of the ITRs for the previous
three years to compute the income of the claimant therein.
15. At the outset, we must reiterate that it is settled law that the objective
behind the claim process in the Motor Vehicles Act 1988 is to grant
‘just and fair compensation’. Recently, a two-judge Bench of this Court
in V. Pathmavathi and Ors. v. Bharthi Axa General Insurance Co.
Ltd. and Anr.7 had succinctly summarised this position and observed:
“12. We ought to remind ourselves, at the outset, that
when an individual dies as a result of a fatal road accident

5 Nature of business would also include businesses and professions where negative income in the initial
years is common and does not reflect the true financial standing of the individual.
6 (2018) 3 SCC 686.
7 2026 SCC OnLine SC 158.
[2026] 7 S.C.R. 499

Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims),
Sriram General Insurance Company Limited and Ors.

and his distressed dependents apply for compensation
either from the owner of the vehicle responsible for the
death or the insurance company with whom such vehicle
is insured, no amount of money can truly compensate for
the loss. Compensation is nothing but a rough estimate,
being a token attempt to ease the financial burden on the
dependents. Take consortium, for example. It is impossible
to put a price on the loss of a loved one’s companionship.
Spousal, filial or parental compensation are all about
acknowledging the emotional void but the payout can
never be more than a rough approximation. It is like trying
to measure the immeasurable. Considering the income
of the deceased, the needs of his dependents and the
emotional toll of the loss, the best that can be ensured is
that the compensation is fair and reasonable, without being
either arbitrary or niggardly. This would be in accord with
the foundational principle governing the determination of
“just compensation” under Section 168 of the Act.
13. In Reshma Kumari v. Madan Mohan [(2013) 9 SCC
65], a three-Judge Bench of this Court held that the
purpose of award of compensation under section 166
read with section 168 of the Act is to place the distressed
dependents of the victim of a fatal road accident, if the
victim had been the sole bread earner, in almost the same
position financially if he lived his natural span of life. It is
obviously not intended to put such distressed dependents
in a better financial position in which they would otherwise
have been if the accident had not occurred. At the same
time, the determination of compensation is not an exact
science and the exercise involves an assessment based
on estimation and conjectures, here and there, as many
imponderable factors and unpredictable contingences
have to be taken into consideration. Obviously, award of
damages in each case would depend on the particular
facts and circumstances of the case but the element of
fairness in the amount of compensation so determined is
the ultimate guiding factor.”
(emphasis supplied)
500 [2026] 7 S.C.R.

Supreme Court Reports

16. Similarly, another two-judge Bench of this Court in Anant v. Pratap
and Anr.8, had expounded that ‘the purpose of compensation under
the Motor Vehicles Act is to fully and adequately restore the aggrieved
to the position prior to the accident.’
17. In the considered view of this Court, there can be no hard and fast
formula for computing the annual income of a deceased person/
claimant. ITRs being a statutory document are an important reference
point when it comes to assessing one’s income, for the purposes of
compensation under the Motor Vehicle Act.
18. We find force in the submission put forth by Mr. J.R Midha,
learned senior counsel. There must be a bifurcation made between
salaried individuals and self-employed individuals when it comes to
assessment of annual income. In our view, for salaried individuals,
only the ITR of the previous year will be sufficient for showcasing
the annual income from salary. The reason for considering only the
preceding year is that the financial impact of promotions is significant
and may be reflected in the ITR for only that year. A situation may
also arise whereby the deceased/claimant might not have completed
a year in the promoted position before the accident or might not
have filed ITR for such period. In such cases the Court concerned
shall take reference to the promotion letter and other corroboratory
financial statements.
19. When it comes to self-employed / individuals carrying out their own
business, in our view, the average of the income specified in the
ITRs of up to the previous three years is to be taken as a reference
point for assessment of annual income from their business. There
may also be a scenario where only one or two ITRs have been
filed. Given such scenarios and the fluctuation of income in these
professions, surrounding circumstances are also to be taken into
consideration. These would include:
a) The nature of the business (including geographic location,
category etc.);
b) Growth pattern of the business and impact of death on the
business;

8 (2018) 9 SCC 450.
[2026] 7 S.C.R. 501

Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims),
Sriram General Insurance Company Limited and Ors.

c) Potential growth of business (for instance certain businesses
are capital intensive at the outset and are profitable at scale/
in the future);
d) Negative income (certain businesses may require losses in the
initial years, which may not reflect the true financial standing); and
e) Any other relevant factor relating to the business.
20. The date when the ITRs are filed would also become a relevant
consideration, as there may be scenarios where inflated income is
showcased after death/injury. In these circumstances, the surrounding
factors of the business would become more relevant. However, if
sufficiently supported by financial statements, such ITRs may also
be taken into consideration.
21. Coming to the facts at hand, the claimant-appellants have brought
on record two ITRs for AY 2017-18 and AY 2018-19, whereby the
annual income of the deceased is Rs. 11,59,882/- and Rs.15,06,571/-
respectively.
22. The High Court took the average of these two years to assess the
annual income of the deceased as Rs. 13,33,226/-. There was no
reference made to other factors relating to the nature of business.
It is borne from the record that the deceased was running his own
construction business. Therefore, with a view to awarding just and
fair compensation, we fix his annual income as Rs. 14,00,000/-. In
view thereof, the compensation payable to the claimant-appellants
would be as follows:

CALCULATION OF COMPENSATION

Compensation Heads Amount Awarded In Accordance with
Yearly Income Rs.14,00,000/-
Future Prospects (40%) 14,00,000/- + National Insurance
(Age being 39) 5,60,000/- Co. Ltd. v. Pranay
= Rs.19,60,000/- Sethi

Deduction (1/3) 19,60,000 – (2017) 16 SCC 680
6,53,333 Para 37, 39, 41, 42
= Rs.13,06,667/- and 59.4

Multiplier (15) 13,06,667 x 13
= Rs.83,82,582/-
502 [2026] 7 S.C.R.

Supreme Court Reports

Loss of Income of the Rs.1,96,00,005
Deceased

Loss of Estate Rs.18,150/- National Insurance
(10% increase) Co. Ltd. v. Pranay
Sethi
Loss of Funeral Rs.18,150/- (2017) 16 SCC 680
Expenses (10% increase) Para 59.8

Loss of Consortium 48,400 X 3 National Insurance
(10% increase) Co. Ltd. v. Pranay
Sethi
= Rs. 1,45,200/-
(2017) 16 SCC 680
Para 59.8
United India
Insurance Co. Ltd.
v. Satinder Kaur,
(2021) 11 SCC 780
Para 37.12
Rajwati alias Rajjo
and Ors v. United
India Insurance
Company Ltd. and
Ors.
2022 SCC Online SC
1699
Para 34

Total Rs.1,97,81,505

Thus, the difference in compensation would be as under:

MACT High Court This Court
Rs.2,27,00,064/- Rs.1,87,75,150/- Rs.1,97,81,505/-

23. The Civil Appeal is allowed in the aforesaid terms. The impugned
award dated 24.02.2023 passed in M.A.C. Case No. 92 of 2019
by MACT, Behrampur, as modified by the High Court of Orissa at
Cuttack vide the impugned order dated 25.04.2024 in MACA No.
452 of 2023, stands modified accordingly. Interest on the enhanced
amount is to be paid, as awarded by the Tribunal.
[2026] 7 S.C.R. 503

Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims),
Sriram General Insurance Company Limited and Ors.

24. The amount be directly remitted into the bank account of the
claimant-appellants. The particulars of the bank account are to be
immediately supplied by the learned counsel for the appellants to
the learned counsel for the respondents. The amount be remitted
positively within a period of four weeks thereafter.
25. Pending application(s), if any, shall stand disposed of.

Result of the case: Appeal allowed.

†
Headnotes prepared by: Nidhi Jain