Commissioner of Income Tax - II vs. M/s. Heritage Finlease Ltd.,

Page No.# 4/13 of the deceased business man to be Rs. 3,000/- per month as the claimant therein did not produce any documents or evidence. However, this Court in its order dated 18.05.2018, passed in MAC Appeal No. 195/2013 accepted the income of the deceased business man to be Rs. 4,000/- per month. The learned counsels for the respondent Nos. 3 & 6 submit that they have no comments to make with regard to the learned Tribunal not awarding future prospects to the claimant. They also submit that the learned Tribunal should have awarded compensation to the claimant under the conventional heads, as provided in National Insurance Company Ltd v. Pranay Sethi & Others, reported in 2017 4TAC 673 (SC). 8. I have heard the learned counsels for the parties. 9. From a perusal of the records and as per the submissions made by the learned counsels for the parties, it is clear that the claimant did not produce any documents or evidence to prove her claim that her deceased husband was earning Rs. 8,000/- per month. However, keeping in view the fact that this Court had also taken the income of the deceased co-passenger to be Rs. 4,000/- per month, without there being no documents or evidence in support of the claimants in MAC Appeal No. 195/2013 and keeping in mind the fact that an LIC agent has the capacity to earn huge sums of money, this Court is of the view that the income of the deceased should be taken as Rs. 4, 000/- per month. 10. With regard to the question whether the learned Tribunal erred in not awarding future prospects to the claimant, this Court is of the view that future prospects should have been awarded to the claimant. The question that has to be decided is with regard to the quantum of future prospects to be awarded. In this case, the accident occurred on 09.11.2007 and the learned Tribunal had disposed off MAC Case No. 36/2008 on 05.07.2012. The further question that has to be decided is whether the quantum of compensation should be as per the prescribed rate of compensation, as on the date of the application/incident or as on the date of awarding compensation by the learned Tribunal. In the case of Union of India vs. Rina Devi, reported in 2019 3 SCC 572, the Apex Court, while deciding a case of payment of compensation in an “untoward incident” under the Railways Act, 1989, has held that compensation would be payable,

Page No.# 5/13 as applicable on the date of the accident with interest, as may be considered reasonable from time to time on the same pattern as an accident claim case. The Apex Court in Union of India vs. Rina Devi (supra) had, while deciding the case, also considered the decision taken by another two Judges bench of the Apex Court in Rathi Menon vs. Union of India, reported in 2001 3 SCC 714, which was to the effect that the rate of compensation would be payable as applicable on the date of the order of the Tribunal. In view of the Apex Court decision in Union of India vs. Rina Devi (supra), compensation as applicable on the date of the accident has to be given with reasonable interest, which was held to be in consonance with the decision of the 4 Judges Bench in Pratap Narain Singh Deo vs. Srinivas Sabata & Anr, reported in 1976 1 SCC 289. As stated earlier, in respect to the present case, the learned Tribunal passed its order in MAC Case No. 36/2008 on 05.07.2012. 11. The decisions of the Apex Court in Sarla Verma & Others v. Delhi Transport Corporation & Another, reported in 2009 6 SCC 121 and Santosh Devi v. National Insurance Co. Ltd & Others, reported in 2012 6 SCC 421 were in force at the time learned Tribunal made its decision. In Sarla Verma & Others (Supra), which was decided on 15.04.2009, the Apex Court held that future prospects should be calculated @ 50%, if the deceased had a permanent job and was below 40 years. The future prospects would be 30% if the age of the deceased was 40-50 years. There was nothing stated with regard to the future prospects of a person who was self employed. The motor accident, pertaining to the case of Sarla Verma & Others v. Delhi Transport Corporation & Another (supra), occurred on 18.04.1988 and the judgment was passed by the learned Tribunal therein prior to 05.07.2012, i.e., the date the learned Tribunal passed the present impugned Judgment under challenge. Paragraphs 20 to 24 of the Judgment in Sarla Verma & Others v. DTC & Another (Supra) states as follows: “20. Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. The question is whether actual income at the time of death should be taken as the income or whether any addition should be made by

Page No.# 6/13 taking note of future prospects. 21. In Susamma Thomas this Court held that the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand (annual contribution to the dependants); and that where the deceased had a stable job, the court can take note of the prospects of the future and it will be unreasonable to estimate the loss of dependency on actual income of the deceased at the time of death. In that case, the salary of the deceased, aged 39 years at the time of death, was Rs. 1032 per month. Having regard to the evidence in regard to future prospects, this Court was of the view that the higher estimate of monthly income could be made at Rs. 2000 as gross income before deducting the personal living expenses. 22. The decision in Susamma Thomas was followed in Sarla Dixit v. Balwant Yadav where the deceased was getting a gross salary of Rs. 1543 per month. Having regard to the future prospects of promotions and increases, this Court assumed that by the time he retired, his earning would have nearly doubled, say Ra. 3000. This Court took the average of the actual income at the time of death and the projected income if he had lived a normal life period, and determined the monthly income as Rs. 2200 per month. 23. In Abati Bezbaruah v. Geological Survey of India, as against the actual salary income of Rs. 42,000 per annum (Rs. 3500 per month) at the time of the accident, this Court assumed the income as Rs. 45,000 per annum, having regard to the future prospects and career advancement of the deceased who was 40 years of age. 24. In susamma Thomas, this Court increased the income by nearly 100%, in Sarla Dixit, the income was increased only by 50% and in Abati Bezbaruah the income was increased by a mere 7%. In

Page No.# 7/13 view of the imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospecs, where the deceased had a permanent job and was below 40 years. (Where the annual income is in the taxable range, the words “actual salary” should be read as “actual salary less tax”). The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of the deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardize the addition to avoid different yardsticks being applied or different methods of calculation being adopted. Where the deceased was self-employed or was on a fixed salary (without provision for annual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances.” 12. In the case of Santosh Devi vs. National Insurance Co. Ltd., reported in 2012 6 SCC 421, the Apex Court has held that it would be reasonable to say that a person who is self-employed or is engaged on fixed wages, will also get 30% increase in his total income over a period of time and if he/she becomes victim of an accident, then the same formula deserves to be applied for calculating the amount of compensation. In Santosh Devi (Supra), the accident occurred sometime in the year 1995. 13. In the case of National Insurance Company Limited vs. Saroj, reported in 2009 13 SCC 508, which was decided on 12.05.2009, the Apex Court has allowed for a higher multiplier to be applied than the correct multiplier, in view of the fact that while determining the amount of compensation to be paid, the learned Tribunal and the High Court had not taken into consideration future prospects payable to the claimant for arriving at a just compensation. During the time the impugned Judgment dated 05.07.2012 was passed, the percentage of income applicable, for payment of future prospects was 30% as laid down in Santosh Devi (Supra). In the case of Bhartiben Nayabha Ker vs. Sidabha Pethaba Manke, reported in 2018 5 SCC 716, the Apex

Page No.# 8/13 Court awarded 25% towards future prospects. However, in Pranay Sethi, & Others (Supra), the Constitution Bench of the Apex Court has held that an addition of 40% of the established income of the deceased towards future prospects should be given, where the deceased was below 40 years and who was self employed or on a fixed salary. 14. In the case of Mangla Ram vs. Oriental Insurance Co. Ltd., reported in 2018 5 SCC 656, decided on 06.04.2018, the Apex Court by following Pranay Sethi & Others (supra) awarded 40% of the income as future prospects. In the case of Sureshchandra Bagmal Doshi and Another vs. New India Assurance Company Limited and Others, reported in 2018 15 SCC 649, a two Judges Bench of the Apex Court, in its Judgment dated 18.04.2018, has awarded 100% of the income of the deceased for future prospects. It has held at para 11-12 as follows:- “11. We have the benefit of the Constitution Bench judgment of this Court in National Insurance Company Limited v. Pranay Sethi & Ors., A.I.R S.C 5157 : 2017 (4) T.A.C 643. While examining the observations in Sarla Verma, supra, the Constitution Bench gave its imprimatur to the addition of 50 per cent to actual salary of the deceased towards future prospects where the deceased had a permanent job and was below the age of 40 years, as in the present case. However, learned Counsel for the appellant has brought to our notice a recent order passed by this Court in SLP (C) No. 22134/2016 and other connected matters dated 22.11.2017 wherein while taking note of the views expressed by National Insurance Company Limited (supra), it has been observed that the percentage for calculating future rise in income is no bar to future prospects being taken at a higher level where the assessment is based on actual evidence led to the satisfaction of the Tribunal/the Court that the future prospects were higher than the standard percentage. Learned Counsel, thus, submitted in the context of the evidence led in the present case that the two certificates dated 16th October, 1998 and 8th July, 2005 were

Page No.# 9/13 proved in terms whereof the deceased’s future prospects would have entitled her to a gross salary in the range of Rs. 14,000/- - Rs. 17,000/- per month. No doubt the second certificate is dated 08.07.2005, after a lapse of 7 (seven) years from the first certificate, but then that would be a more realistic estimate of what a person holding that post would be earning at that stage of time. There is no rebuttal evidence led by the Insurance Company and we see no reason to doubt these certificates. Thus, the assessment of the Tribunal is based on the evidence led in the present case. As noticed above, the standardized percentage is capable of being varied if the evidence is so led. 12. We are, thus, of the view that looking into the conspectus of the aforesaid facts and the legal position, the Tribunal was justified in giving a 100 per cent increase and taking the future prospects at Rs. 12,000/- per month. 15. The question that thus arises is what will be the percentage of income the appellant will be entitled towards future prospects. In the case of M.A. Murthy v. State of Karnataka, reported in 2003 7 SCC 517, the Apex Court has held that normally, the decision of the Supreme Court enunciating a principle of law is applicable to all cases irrespective of stage of pendency thereof, because it is assumed that what is enunciated by the Supreme Court is, in fact, the law from inception. The doctrine of prospective overruling which is a feature of American jurisprudence is an exception to the normal principle of law. However, with regard to the question of payment of “future prospects”, the principle of law enunciated by the Apex Court in the case of National Insurance Company Limited vs. Saroj (supra), Sarla Dixit & Anr. vs. Balwant Yadav & Ors (supra), Kerala SRTC vs. Susamma Thomas (supra), Bhartiben Nayabha Ker vs. Sidabha Pethaba Manke (supra) and Santosh Devi (Supra) has not been changed by Apex Court in Pranay Sethi & Others (Supra). The only difference in the judgments is on the “percentage of the income” to be applied for calculating the future prospects, while awarding compensation. The difference in the

Page No.# 10/13 amount of percentage of the income to be awarded for compensation, cannot be said to be a change in the principle of law, which was applicable for computing compensation. As the learned Tribunal did not consider payment of compensation under future prospects, the non-computation of the same is not in consonance with the payment of just compensation, which has been enunciated in Section 168 of the M.V Act, 1988 and the judgments of the Apex Court. The various judgments of the Apex Court, as shown in the preceding paragraphs shows that future prospects have been given by taking different percentages of the income and that there is no fixed percentage being applied by the Apex Court. However, as the Constitution Bench of the Supreme Court in Pranay Sethi & Others (Supra) has fixed the future prospects of a deceased at 40%, if he was self-employed and below 40 years of age, this Court is of the view that the appellant should be awarded future prospects @ 40% of the income that the deceased was receiving at the time of his death. 16. The learned Tribunal had awarded the compensation amount of Rs. 3,72,000/- as follows:- 1) Income = Rs. 3,000 x 12 x 15 x 1/3 = Rs. 3,60,000/- 2) Funeral expenses = Rs. 2,000/- 3) Loss of estate = Rs. 5,000/- 4) Loss of consortium = Rs. 5,000/- Total = Rs. 3,72,000/- 17. The further question that has to be decided is whether the appellant will be entitled to be paid compensation as provided under the conventional heads in Pranay Sethi & Others (Supra). A perusal of the various judgments of the Apex Court goes to show that there was no thumb rule with regard to the amount of compensation to be paid under conventional heads, save as provided the 2nd Schedule to the M.V Act, 1988 at the time the accident occurred, i.e., on 09.11.2007. There is

Page No.# 11/13 nothing to show that the learned Tribunal did not give just compensation under conventional heads, i.e., with regard to the funeral expenses, loss of estate and loss of consortium. However, as the Apex Court has fixed the rate of compensation under conventional heads in Pranay Sethi & Others (supra), this Court is of the view that the claimant/appellant has a right to the higher compensation amount allowed by the Apex Court. 18. In the case Khusboo Chirania @ Kanta Chirania v. Kamal Kumar Sovasaria, reported in 2018 0 Supreme(Gau) 966 and in the case of Nasima Begum v. Keramat Ali, reported in 2019 0 Supreme(Gau) 507, this Court has stated no interest on future prospects should be given. Though no reason has been enunciated in the above judgments, the reason for the same seems to be due to the fact that future prospects is relatable to an income to be received in the future and as such, there could not be any loss to the claimant for the payment of future prospects, at the time the deceased met with the accident. The reason for awarding interest on the compensation amount, minus the future prospects is due to the fact that though the loss of dependency starts from the date of the accident and the compensation amount is computed on the date of the Award of the Tribunal, interest is awarded to compensate the loss of money value on account of lapse of time, such as time taken for the legal proceedings and for the denial of right to utilize the money when due. However, future prospects is with regard to the probable income to be received in the future and as such there is no requirement to compensate the claimant by way of future interest, for the loss that is to occur in the future, as the future is yet to happen. Further, future prospects is given for the entire future and as such, the claimant is getting compensation in a lumpsum under future prospects prior to the occurrence of future event. Thus, with regard to future prospects, this Court is also of the view that there cannot be any interest on future prospects, as the same relates to an income to be given in the future. 19. In view of the finding of this Court that the income of the deceased should be taken as Rs. 4,000/-, future prospects should be 40% and the payment of compensation under conventional heads should be as per Pranay Sethi & Ors.

Page No.# 12/13 (supra), the compensation to be awarded to the claimant will be as follows:- 1) Income = Rs. 4,000 x 12 x 15 x 1/3 = Rs. 4,80,000/- 2) Future prospects = 40% of Rs. 4,000 = 1,600 x 12 x 15 x 1/3 = Rs. 1,92,000/- 3) Funeral expenses = 15,000 4) Loss of estate = 15,000 5) Loss of consortium = 40,000 Total = Rs. 7,42,000/- 20. The Insurance Companies, i.e., the respondent Nos. 3 to 6 are accordingly directed to pay compensation amounting to Rs. 7,42,000/- to the appellant, which is apportioned @ 50% each, against the respondent Nos. 3 to 6. The Insurance Companies will thus deposit Rs. 3,71,000/- each, minus the amount already paid earlier, within one month from the date of receipt of a certified copy of this Order in the learned Tribunal, who shall thereafter disburse the same to the appellant. Interest at the rate of 6% p.a shall be calculated on the compensation amount awarded above, but shall not be calculated on the future prospects. The interest will be calculated from the date of filing of the claim petition till final payment. Consequently, the impugned Judgment dated 05.07.2012 passed by the Court of the Addl. District & Sessions Judge, (FTC), No. 2, MACT, Kamrup, in MAC Case No. 36/2008 (Old MAC No.2952/2007) is modified to the extent indicated above. The appeal is accordingly disposed off. Send back the LCR. JUDGE

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