PRINCIPAL COMMISSIONER OF INCOME TAX-1 vs. POONIA WINES(REWARI)

2 the rear side of the motor cycle on which the deceased was proceeding as a rider and then dashed against pavement. As a result of which, deceased Nagaraju, his son third petitioner, who was pillion rider sustained multiple injuries, the passersby called 108 Ambulance, shifted the deceased to SV Hospital, Tirupati and his son third petitioner was shifted to SVRRGHG Hospital, Tirupati for treatment. While undergoing treatment at SVIMS Hospital, deceased Nagaraju died due to injuries on 07.12.2009. The wife and two children of the deceased filed the present 4. petition under Section 166(l)(c) of the Motor Vehicles Act, 1988 claiming compensation of Rs.70,00,000/- on account of death of the deceased. It was pleaded that the deceased was working as Commercial Supervisor in South Central Railways and was on the verge of promotion to the post of Supervisor and that his next increment was due from 01.07.2010. The Tribunal in its Award opined that the accident occurred due 5. to rash and negligent driving and after relying on Exs.X.2 & X.3 and applying multiplier of'll'awarded compensation as under:-

3 1. Towards loss of dependency Rs.35,05,524-00 2. Towards loss of consortium S.Towards funeral expenses Rs. 1,00,000-00 25,000-00 Rs. Total : Rs.36,30,524-00" In the present Appeal, the only ground urged by the Appellant is 6. that the Tribunal did not deduct tax payable on the income determined by the Tribunal. 7. The salary adopted by the Tribunal is Rs.39,835/- and the annual income comes to Rs.4,78,020/- for the Financial Year 2010-2011. The salary is inclusive of certain contributions, which are exempted from the provisions of income tax. The tax slabs keep changing every year and the taxable income is varying every financial year and in that context which of the tax slab is to be taken into consideration is a question that needs to be addressed. For the purpose of this case, a short Tabular Statement with 8. reference to the basic tax slabs provided under the Income Tax Act, 1961 from the Financial Years 2010-2011 to 2019-2020 i.e., the supposed year of superannuation of the deceased is extracted below:-

4 Tax percentage for income over basic tax exemption upto Rs.5,00,000/- Basic tax exemption Financial year S.No. 10% on Rs.3,40,000/- 10% on Rs.3.40.000/- 10% on Rs.3,00,000/- 10% on Rs.3,00,000/- 10% on Rs.2.50,000/- 10% on Rs.2.50,000/- 10% on Rs.2.50,000/- 10% on Rs.2.50,000/- 5% on Rs.2,50,000/- 5% on Rs.2,50,000/- ~ Rs, 1,60,000/- Rs. 1.60,000/- Rs.2,00,000/- Rs.2,00,000/- Rs.2,50,000/- Rs.2,50,000/- Rs.2,50,000/-~ Rs. 2,50,000/- Rs.2,50,000/- Rs.2,50,000/- 2010-11 2011-12 1. 2. 2012-13 2013-14 2014-15 3. 4. 5. 2015-16 6. 2016-17 7. 2017-18 8. 2018-19 9. 2019-20 10. To even out, this Court adopts mid-point i.e., Financial Year for calculation of tax payable by the deceased. The taxable income of the deceased as adopted by the tribunal is Rs.4,78,020 - exemption provided by Income Tax 9. 2014-2015 Rs.2,50,000/- (Basic tax Department for FY 2014-15) = Rs.2,28,020/-. In this amount, certain exemptions like HRA, Transport allowance, medical reimbursements . Home loans/study loans etc are provided under the Income Tax Act. In that scenario, it would be difficult to visualize the amount of tax lot of it would depend on the tax payable by the deceased as a planning and exemptions claimed by the individual.

5 Even otherwise, the income tax deduction sought by the Insurance company cannot be to the benefit of the Insurance company while calculating the compensation. It is also not the case of the Insurance company that they would be paying the amount deducted towards tax to the Income tax department. The taxability is for the Income tax department to consider and not for the Insurance 10. company. The broader question which remains to be addressed is whether tax could be deducted for compensation under Motor Vehicles Act, 1988 and is subject matter of Judgments of various High Courts. A Division Bench of this Court in Dr. Narahari Nageshwara Vs. M/s LTC Logistics Pvt. Ltd., opined that compensation awarded is taxable. The Madras High court in Managing Director, Transport Corporation (Salem) Vs Chinnadurai; Himachal Pradesh High Court in Court on its own motion Vs The Himachal Pradesh State Cooperative Bank Ltd.,; The Gujarat High Court (DB) in The Oriental Insurance Co., Ltd. Vs Chief Commissioner of Income Tax and Bombay High Court (DB) in Shri Rupesh Rashikant Shah Vs Union of India have opined 11. income not Tamiinadu State

6 that the Compensation under Motor Vehicles Act, 1988 is not eligible to income tax. At the same time, the Rajasthan High Court in Satya Narayan Vs HDFC ERGO Insurance and Madras High Court in Cholamandalam Genera! Insurance Co., Ltd. Vs M. Ashok Kumar had referred this issue to Larger Benches and decision of Larger Bench is awaited in both courts. i- : Coming back to the case, the amounts awarded by the Tribunal 12. under the heads of loss of consortium and funeral expenses as extracted above are modified keeping in tune with the dicta Hon'ble Supreme Court in Magma General Insurance Co. Ltd vs Nanu Ram Alias Chuhru Ram^ granting consortium of Rs.40,000/- to each of the claimant is awarded apart from Funeral expenses and Loss of estate @ Rs. 15,000/- each as specified in Para 51 of National Insurance Company Ltd., vs V.Pranay SethF. The Compensation is modified as under;- Rs.35,05,524/- Rs.40,000/- X 3 = Rs. 1,20,000/- Rs. 15,000/- Towards loss of dependency- Towards loss of consortium - Towards Funeral expenses Towards Loss of estate - Rs. 15,000/- ^2018(18) see 130 ^2017(16) see 680

\ 7 The interest as awarded by the lower court is sustained and the 13. MAGMA is partly allowed to the extent indicated above. No costs. As a sequel, pending applications, if any, shall stand closed. SDI- K J RAJA BABU ASSISTANT REGISTRAR //TRUE COPY// OFFICER SEi To, 1. The Chairman, Motor Accident Claims Tribunal - cum - IV Additional District Judge, Tirupathi, Chittoor District (with records if any) 2. One CC to Smt. S Pranathi, Advocate [OPUC] 3. One CC to Sri Maheswara Rao Kuncheam, Advocate [OPUC] 4. Three CD Copies Tk sree

HIGH COURT DATED:18/12/2023 ORDER MACMA.No.36 of 2024 ALLOWING THE M.A.C.M.A. IN PART WITHOUT COSTS