1 R IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE16H DAY OF APRIL2018BEFORE THE HON’BLE MR.JUSTICE S.N.SATYANARAYANA AND THE HON’BLE MR.JUSTICE R.DEVDAS MISCELLANEOUS FIRST APPEAL NO.200080/2016 (MV) Between:
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2. 3.
4. 5.
6. Smt. Mahananda W/o Late Shivaraj Patil, Age:
34. years, Occ: Household, Bhuneswari D/o Late Shivaraj Patil, Age:
13. years, Occ: Student, Shivani D/o Late Shivaraj Patil, Age:
11. years, Occ: Student, Chanveer S/o Late Shivaraj Patil, Age:
9. years, Occ: Student, Somanath S/o Late Shivaraj Patil, Age:
6. years, Occ: Student, Shanthabai W/o Chandrakanth Patil, Age:
62. years, Occ: Household, Appellant No.2 to 5 are minor Under the Guardianship of their Natural Mother Appellant No.1. 2 All are R/o. Yelavantagi, Tq; Basavakalyan, Dist; Bidar-584101. … Appellants (By Babu H. Metagudda, Advocate) And:
1. Mr. Gurulingappa S/o Veerbhadrappa, Age:
47. years, Occ: Owner of Tata Spacio No.MH-24/C-6468 R/o. Ambi Jogi Road, Latur, Dist; Latur, Maharashtra State-584101.
2. The Divisional Manager, Oriental Insurance Co. Ltd, N.G.Complex, 1st Floor, Opp: Mini Vidhan Soudha, Kalaburagi-585101. … Respondents (By Manvendra Reddy, Advocate for R2; Notice to R1 dispensed with v/o dated 04.04.2017) This MFA is filed under Section 173(1) of the Motor Vehicles Act, 1988 praying to call for the records in MVC No.154/14 on the file of Senior Civil Judge and Addl. M.A.C.T. at Basavakalyan. Allow this appeal and modify the judgment and award dated 7-7-2015 passed in MVC No.154/2014 by Senior Civil Judge and Addl. M.A.C.T. at Basavakalyan. And enhancing the compensation from Rs.25,84,760/- with 6% interest to Rs.80,00,000/- with 12% interest. Grant such other and further relief’s as this Hon’ble Court deems fit, in the circumstance of the case, in the interest of justice and equity. This appeal coming on for admission this day, R.Devdas J., delivered the following:
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JUDGMENT
The appellants are the claimants before the Senior Civil Judge and Additional MACT at Basavakalyan in MVC No.154/2014.
2. The appellants are assailing the quantum of compensation awarded by the Tribunal on the ground that the compensation awarded towards “loss of income” is on the lower side and that the `Tribunal has erred in deducting 30% towards Income Tax, contrary to the provisions of the Income Tax Act and the established principles governing Motor Accident Claims Cases.
3. For the sake of convenience and clarity, the parties will be referred to as the ‘Claimants’ and ‘Insurance Company’ wherever context requires so. The deceased Shivaraj met with a motor vehicle accident on 05.11.2013 while he was proceeding on his motor cycle 4 bearing No.KA-32/EB-2530 on NH-9, near Yerandagi village. The offending vehicle Tata Specio bearing No.MH-24/C-6468 driven rashly and negligently by the driver, lost control and dashed against the motorcycle causing grievous injuries to Shivaraj and the pillion rider Rajkumar. Sri. Shivaraj succumbed to the injuries on the way to Hospital.
4. The first petitioner is the wife while petitioner Nos.2 to 5 are the children and petitioner No.6 is the mother of the deceased Shivaraj. The Tribunal has awarded Rs.24,89,760/- towards loss of dependency, Rs.30,000/- towards loss of love and affection, Rs.15,000/- towards funeral and transportation, Rs.30,000/- towards loss of estate and Rs.20,000/- towards loss of consortium. In all a sum of Rs.25,84,760/- is awarded by the Tribunal, along with interest of 6% per annum. 5 5. The Tribunal has accepted the contention of the claimants that the deceased Shivaraj was working as a Senior Clerk at Basavakalyan Education Trust, Engineering College, Basavakalyan and was drawing Rs.19,000/- per month as salary. Ex.P11 is the salary certificate issued by the Superintendent of Basavakalyan Education Trust College and approved by the Principal of the College who has entered the witness box to testify on this aspect. Though the claimants had contended before the Tribunal that the deceased was also having agricultural income, the Tribunal has rightly discredited the said contention since no cogent evidence was placed before the Tribunal with regard to the agricultural income alleged to be earned by the deceased. Relying on the transfer certificate Ex.P13, the Tribunal has concluded that the date of birth of the deceased was 28.06.1974 and therefore the deceased was aged 40 years at the time of the accident. The Tribunal has proceeded to add 30% to the salary 6 towards future prospects relying on the judgment of the Apex Court in the case of Sarla Verma and Others V/s Delhi Transport Corporation reported in 2009 ACJ1298. The Tribunal has deducted 1/5th of the income towards the personal and living expenses of the deceased. Though the Tribunal arrived at Rs.35,56,800/- towards loss of dependency, it has deducted 30% towards Income Tax and surcharge, based on the decision rendered by the Apex Court in the case of Shamavati Sharma V/s Karmasingh and others and another case Vimal Kumar and Others V/s Kishor Dan.
6. The question that arises for consideration in this case is : Whether the Tribunal was justified in deducting 30% of the income of the deceased towards income tax and surcharge?.
7. The Hon’ble Apex Court, in the case of Vimal Kanwar and Others V/s Kishore Dan and Others, 7 (2013) 7 SCC476has held that generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. It is further observed that “where the annual income is in taxable range, the word “actual salary” should be read as “actual salary less tax”. Therefore, it is clear that if the annual income comes within the taxable range income tax is required to be deducted for determination of the actual salary. But while deducting income-tax from salary, it is necessary to notice the nature of the income of the victim. If the victim is receiving income chargeable under the head "salaries" one should keep in mind that under Section 192(1) of the Income-tax Act, 1961, any person responsible for paying any income chargeable under the head “salaries” shall at the time of payment, deduct income-tax on estimated income of the employee from “salaries” for the financial year. Such deduction is commonly known as tax deducted at source (‘TDS’ for short). When the employer fails in 8 default to deduct the TDS from employee salary, as it is his duty to deduct the TDS, then the penalty for non- deduction of TDS is prescribed under Section 201(1A) of the Income-tax Act, 1961.
8. Therefore, in case the income of the victim is only from “salary”, the presumption would be that the employer under Section 192(1) of the Income-tax Act, 1961 has deducted the tax at source from the employee’s salary. Their Lordships, in the case of Vimal Kanwar supra, have held that in the absence of any evidence to the contrary, it is presumed that the salary paid to the deceased was paid in accordance with law i.e. by deducting the income-tax on the estimated income of the deceased. On going through the rate of tax applicable for the year 1997-98, their Lordships have held that the rate of tax applicable during the relevant period was 15% and not 20%. More importantly what has to be noticed is that only the 9 income chargeable is liable to be taxed after giving statutory deductions.
9. It is also profitable to notice that Hon’ble Supreme Court of India, in the case of National Insurance Company Ltd. V/s Indira Srivastava and others, (2008) 2 SCC763 has held, “if dictionary meaning of the word “income” is taken to its logical conclusion, it should include those benefits, either in terms of money or otherwise, which are taken into consideration for the purpose of payment of income tax or professional tax although some elements thereof may or may not be taxable or would have been otherwise taxable but for the exemption conferred thereupon under the statute.
10. This Court has perused the salary certificate Ex.P11 where the gross salary of Sri. Shivaraj is Rs.19,203/-. Deductions are made towards Provident Fund, Profession Tax, LIC and Group Insurance. 10 Therefore the only statutory deduction is towards professional tax of Rs.200/- per month.
11. The Tribunal has erred in applying 30% deduction towards Income Tax and surcharge. For the year 2012-13 there is an exemption of Income Tax upto Rs.2,00,000/- and since the annual income of the deceased was Rs.2,28,000/-the slab applicable is 10%. Therefore Income Tax was payable by the deceased on the income over and above Rs.2,00,000/-. The only other deduction that could be made was towards Professional Tax, which is Rs.200/- per month.
12. The Apex Court has in the case of National Insurance Company Limited V/s Pranay Sethi and Others reported in 2017 ACJ2700held that while determining the income, an addition of 50% should be allowed to the income of the deceased towards future prospects, where the deceased had a permanent job and was a below the age of 40 years. In the case of hand, 11 the Tribunal has arrived at a conclusion that the age of the deceased was 39 years 4 months at the time of the accident. Therefore 50% is to be added towards future prospects.
13. In the light of the above discussion, the loss of dependency and future prospects has to be re- calculated as follows: Rs.19,000/- less 1/5th (Rs.3,800/-) = Rs.15,200/- Rs.15,200 X12= Rs.1,82,400/- Less Income Tax on Rs.28,000/- at 10% (Rs.2,800/-) = Rs.1,79,600/- Less Professional Tax of Rs.2,400/- = Rs.1,77,200/-. Add 50% towards future prospects (Rs.88,600/-) = Rs.2,65,800/- Add Multiplier of 15 = Rs.39,87,000/- 14. The award under conventional heads is reduced from Rs.95,000/- to Rs.70,000/- in terms of 12 the latest judgment of the Apex Court in the case of Pranay Sethi, Supra.
15. The enhanced amount as indicated above, is payable with interest at the rate of 6% per annum from the date of the petition till realization of the amount.
16. The enhanced amount along with interest shall be deposited by the Insurance Company within eight weeks from the date of receipt of a copy of the judgment. On deposit of the enhanced amount, 50% shall be kept in fixed deposit in any Nationalized Bank for a period of five years and the remaining 50% shall be released to the claimant. In terms of the above, the appeal stands allowed in part. SMP Sd/- JUDGE Sd/- JUDGE