2024 (1) TMI 1079 - HC - Income Tax

The Motor Accident Claims Case (MCC) - Computation of income of the deceased for passing award - computation of future prospects - Tribunal while passing award had taken income of the deceased adding 15% towards future prospects - Tribunal had considered gross salary of the deceased @ Rs. 53,728/- and after making deduction for HRA treated gross salary @ Rs. 53,200/- per month or Rs. 6,38,400/- per annum HELD THAT - Tribunal computed Income Tax @ Rs. 40,180/- overlooking the facts that standard deduction and Professional Tax is to be deducted, so also amount exempted under Section 80(c) of the Income Tax Act are to be exempted. Thus, out of deduction is to be of Rs. 50,000/- towards standard deduction. Another sum of Rs. 72,000/- will be deducted under Section 80(c) of the Income Tax Act on account of monthly contribution of Rs. 6000/- per month towards GPF and thereafter Professional Tax of Rs. 2500/- is to be deducted. Thus, total taxable income comes out to Rs. 5,13,900/-. Tribunal has note that first sum of Rs. 2,50,000/- is exempted from payment of Income Tax and thereafter, further sum of Rs. 2,50,000/- is taxable @ 5% i.e. Rs. 12,500/- and on the remaining amount Income Tax would be payable @ 20% therefore, total Income Tax liability comes out to Rs. 15,280/- 3% cess. making it Rs. 15,738.40/-. Net income on which dependency is to be calculated after deduction of Income Tax comes out to Rs. 6,22,662/-. 15% is to be added towards future prospects which comes to Rs. 7,16,061.30/- from which 1/4th is to be deducted towards living expenses of the deceased as he survived by five legal heirs and then when multiplier of 09 (nine) is applied, then total pecuniary compensation comes out to Rs. 48,33,414/- against a sum of Rs. 46,24,119/-. Thus, there will be enhancement to the tune of Rs. 2,09,295/- under the head of pecuniary compensation which will be admissible in favour of the claimants and not Rs. 4,83,174/- awarded by this Court. Thus, there being a mistake of computation of future prospects twice, there will be reduction and actual enhancement will come out to only Rs. 2,09,295/- which will be admissible in favour of the claimants alongwith interest @ 6% from the date of filing of the claim petition.

Summary

Issues involved:
The judgment involves a Motor Accident Claim Case (MCC) where the main issue is the computation of pecuniary compensation for the deceased, specifically regarding the calculation of future prospects and income tax deductions.

Computation of Income and Future Prospects:
The High Court found an error in the computation of future prospects in the award passed by the Tribunal. The deceased's gross salary was considered at Rs. 53,728 per month, but after deductions for HRA and other factors, the net income for dependency calculation was determined to be Rs. 6,22,662. The Court added 15% towards future prospects, resulting in a total of Rs. 7,16,061.30. However, after deducting living expenses and applying a multiplier of 9, the pecuniary compensation was recalculated to be Rs. 48,33,414, leading to an enhancement of Rs. 2,09,295 compared to the original award of Rs. 46,24,119.

Error in Computation and Final Decision:
The Court noted that there was a mistake in computing future prospects twice, leading to confusion in the case. As a result, the actual enhancement in pecuniary compensation was determined to be Rs. 2,09,295, rather than the initially awarded Rs. 4,83,174. Therefore, the Court ordered the enhancement of Rs. 2,09,295 to be granted to the claimants, along with an interest rate of 6% from the date of filing the claim petition. The MCC was disposed of based on these terms.