Case Law Analysis
|Supreme Court of India
Motor Accident Compensation | ITR-Based Income Assessment Must Be Contextual, Not Mechanical: SC Distinguishes Salaried vs Self-Employed Claimants
The Supreme Court ruled that income tax returns (ITRs) cannot be mechanically applied to determine compensation under the Motor Vehicles Act. Courts must evaluate ITRs contextually, considering the deceased’s employment status-salaried individuals’ ITRs reflect actual income, while self-employed claimants’ ITRs may understate earnings due to business deductions. The judgment mandates a nuanced approach to prevent unjust compensation reductions, impacting insurers, claimants, and tribunals.