[2010] 8 S.C.R. 417 SHYAMWATI SHARMA & ORS. A v. KARAM SINGH & ORS. (Civil Appeal No. 5316 of 2010) JULY 13, 2010 B [R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.] Motor Vehicles Act, 1988 - Motor accident - Death of 36 year old man - Claim for compensation by his six dependants - Awarded by Tribunal - Enhanced by High C Court - On appeal, held: Compensation further enhanced recalculating the same by increasing salary by 50% towards future prospects; deducting 30% towards taxes and 25% towards personal expenses and by applying multiplier of 15. D Compensation - For motor accident - Deduction of 30% from the income of the deceased towards taxes - Propriety of - Held: If annual income is in taxable range, appropriate deduction towards taxes is proper. E After death of a Sub-Inspector of Police aged 36 years, in a motor accident, six of his dependants made a claim for compensation. The Tribunal awarded compensation of Rs. 14,44,6001- with 9% interest p.a. after deducting one third from his gross monthly salary towards personal and living expenses, and by applying F multiplier of 13. High Co1.1rt on appeal enhanced the compensation to Rs. 14,65,7761-. It reached the amount by making addition to income towards future prospects, deducting therefrom 30% towards deduction from salary; by deducting one fourth of income towards personal G expenses, and by applying multiplier of 13.

The instant appeal was filed for enhancement of compensation contending that deduction of 30% towards 417 H 41°8 SUPREME COURT REPORTS [2010] 8 S.C.R. A taxes was not warranted and that the court should have applied multiplier of 16. Allowing the appeal, the Court HELD: 1. Wherever the deceased is below 40 years B of age and had a permanent job, the actual salary (less tax) should be increased by 50% towards future prospects, to arrive at the monthly income. Where the number of dependants of a deceased are in the range of 4 to 6, the deduction towards personal and living C expenses of the deceased should be 25%. In regard to persons aged 36 to 40 years, the appropriate multiplier should be 15. Applying the said principles, compensation in the instant case is recalculated. The compensation is increased from Rs.14,66,600/- to Rs.19, 70,250/-. The D increased amount shall carry interest at the rate of 6% per annum from the date of claim petition to the date of payment. [Paras 6 and 9] [421-B-C; 422-E] Sar/a Verma vs. Delhi Transport Corporation 2009 (6) E sec 121, relied on. 2. The deduction of 30% from the salary is correct.

Where the annual income is in the taxable range, appropriate deduction should be made towards tax. In the instant case as the annual income has been worked F out as Rs.2,48,292/-, appropriate deduction has to be made towards income-tax. The rate of income tax is a varying figure, with reference to taxable income after permissible deductions and the year of assessment. The High Court has rightly assessed the deduction as 30%. G However, it is clarified that while ascertaining the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium, repayments of loans etc., should not be excluded from the income. The deduction towards H income tax/surcharge alone should be considered to SHYAMWATI SHARMA & ORS. v. KARAM SINGH & 419 ORS. arrive at the net income of the deceased. (Para 8] (421- A H; 422-A-D] Sar/a Verma vs. Delhi Transport Corporation 2009 (6) sec 121, distinguished. B Case Law Reference: 2009 (6) sec 121 Relied on. Para 6 Distinguished. Para 8 CIVIL APPELLATE JURISDICTION : Civil Appeal No. C 5316 of 2010. From the Judgment & Order daed 20.4.2007 of the High Court of Delhi at New Delhi in F.A.O. No. 250 of 2003. R.K. Khanna for the Appellant. D A.K. Raina, Dr. Kailash Chand for the Respondent. The Judgment of the Court was delivered by R. V. RAVEENDRAN J. 1. Leave granted. E

2. This is an appeal for enhancement of compensation, by the mother, widow, three children and father of Kuldeep Sharma, a Sub-Inspector of Poli~e. aged 36 years, who died in a motor accident on 25.12.1990. According to the salary F certificate, his basic pay was Rs.7425/-, the gross salary (pay and allowances) was Rs.13,794/-, the deductions aggregated to Rs.4,305/- and the net take home salary was Rs.9,489/- per month. 3. The Tribunal by its award dated 17 .1.2003 held the G respondents liable and directed the insurer to pay to the appellants, Rs.14,44,600/- as compensation, with simple interest at 9% per annum from the date of filing of the claim petition (21.2.2002) till re-alization. The Tribunal arrived at the said compensation in the following manner : It deducted one H 420 SUPREME COURT REPORTS [20101 8 s.c:R. A third from the gross monthly salary of Rs.13, 794/- towards the personal and living expenses of the deceased and determined the contribution to the family as Rs.9, 196/- per month or Rs.1, 10,352/- per annum. It applied the multiplier '13' and arrived at the loss of dependency as Rs.14,34,576/- rounded B off to Rs.14,34,600/-.

4. Feeling aggrieved the claimants filed an appeal. The High Court started with the gross salary as Rs.13, 794/- per month. Drawing an assumption that the deceased would have at least got one promotion or gone to the next higher grade if C he had completed the remaining 24 years of service, and taking note of the recommendations of the Fifth Pay Commission and the annual increments, it inferred that by the time the deceased would have retired, he would have been earning a minimum gross income of Rs.22,000/- per month. The average of the D actual monthly income (Rs.13794/-) and the projected monthly income at the time of retirement (Rs.22000), that is Rs.17,897/ -, was taken as the monthly income. The High Court deducted 30% thereof towards 'deductions from salary' (income-tax etc.) and arrived at the net monthly income as Rs.12,528/-. It further E deducted one fourth thereof towards the personal and living expenses of the deceased and arrived at the contribution to the family as Rs.9,396/- per month or Rs.1, 12, 752/- per annum. By applying the multiplier of 13, it calculated the loss of dependency as Rs.14,65,776/-. As a consequence, it increased the F compensation awarded by the Tribunal by Rs.32,000/- with interest at the rate of 6% per annum from the date of claim petition till the date of payment. 5. The said judgment of the High Court is challenged in G this appeal. The appellants urged the following two contentions:

(i) The High Court ought not to have made a 'deduction' of 30% from the salary towards taxes etc.; and H (ii) The High Court ought to have applied the multiplier SHYAMWATI SHARMA & ORS. v. KARAM SINGH & 421 ORS. [R.V. RAVEENDRAN, J.] '16' instead of '13', having regard to the age of the A deceased. 6. This Court in Sar/a Verma vs. Delhi Transport Corporation - 2009 (6) SCC 121, has stated the principles relating to 'addition to income' towards future prospects. This B Court held that wherever the deceased was below 40 years of age and had a permanent job, the actual salary (less tax) should be increased by 50% towards future prospects, to arrive at the monthly income. It also held that where the number of dependants of a deceased are in the range of 4 to 6, the C deduction towards personal and living expenses of the deceased should be 25%. It further held that in regard to persons aged 36 to 40 years, the appropriate multiplier should be 15. We will re-calculate the compensation by applying the said principles. D ... 7. As noticed above, the gross salary was Rs.13,794/~ per month or Rs.1,65,528/- per annum. By adding 50% towards future prospects (as the deceased was less than 40 years of age), the deemed gross income would have been Rs.20,691/

- per month or Rs.2,48,292/- per annum. The percentage of E deduction towards income-tax and surcharge, taken as 30% by the High Court, does not require to be disturbed, having regard to the income. On such deduction, the net annual income of the deceased would have been Rs.1, 73,800/-. From the said sum, one-fourth (25%) had to be deducted towards the personal F and living expenses of the deceased. Thus the contribution of the deceased to his family would have been Rs.1,30,350/- per annum. By applying the multiplier of 15, the total loss of dependency will be Rs.19,55,250/-. By adding a sum of Rs.5,000/- each under the heads of loss of consortium, loss of G estate and funeral expenses, the total compensation is determined as Rs.19, 70,250/-. 8. The submission of the respondents that the deduction of 30% from the salary is not warranted in view of the decision in Sar/a Verma, is not sound. In Sar/a Verma, the monthly salary H 422 SUPREME COURT REPORTS (2010] 8 S.C.R.

A of the deceased was only Rs.4004/- and the annual income even after taking note of future prospects was Rs. 72072/-. The income was in a range which was exempt from tax, if the permissible deductions were applied. Therefore, this Court did not make any deduction towards income-tax. But this Court B made it clear that where the annual income is in the taxable range, appropriate deduction should be made towards tax. In this case as the annual income has been worked out as Rs.2,48,292/-, appropriate deduction has to be made towards income-tax. The rate of income tax is a varying figure, with c reference to taxable income after permissible deductions and the year of assessment. The High Court has assessed the deduction as 30% and on the facts, we do not propose to disturb it. We however make it clear that while ascertaining the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium,0 repayments of loans etc., shoutd not be excluded from the income. The deduction towards income tax/surcharge alone should be considered to arrive at the net income of the deceased. E 9. We accordingly allow the appeal and increase the compensation from Rs.14,66,600/- to Rs.19,70,250/-. The increased amount shall carry interest at the rate of 6% per annum from the date of claim petition to the date of payment. The parties to bear their respective costs. K.K.T. Appeal allowed.

[2010] 8 S.C.R. 417 SHYAMWATI SHARMA & ORS. A v. KARAM SINGH & ORS. (Civil Appeal No. 5316 of 2010) JULY 13, 2010 B [R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.] Motor Vehicles Act, 1988 - Motor accident - Death of 36 year old man - Claim for compensation by his six dependants - Awarded by Tribunal - Enhanced by High C Court - On appeal, held: Compensation further enhanced recalculating the same by increasing salary by 50% towards future prospects; deducting 30% towards taxes and 25% towards personal expenses and by applying multiplier of 15. D Compensation - For motor accident - Deduction of 30% from the income of the deceased towards taxes - Propriety of - Held: If annual income is in taxable range, appropriate deduction towards taxes is proper. E After death of a Sub-Inspector of Police aged 36 years, in a motor accident, six of his dependants made a claim for compensation. The Tribunal awarded compensation of Rs. 14,44,6001- with 9% interest p.a. after deducting one third from his gross monthly salary towards personal and living expenses, and by applying F multiplier of 13. High Co1.1rt on appeal enhanced the compensation to Rs. 14,65,7761-. It reached the amount by making addition to income towards future prospects, deducting therefrom 30% towards deduction from salary; by deducting one fourth of income towards personal G expenses, and by applying multiplier of 13.

The instant appeal was filed for enhancement of compensation contending that deduction of 30% towards 417 H 41°8 SUPREME COURT REPORTS [2010] 8 S.C.R. A taxes was not warranted and that the court should have applied multiplier of 16. Allowing the appeal, the Court HELD: 1. Wherever the deceased is below 40 years B of age and had a permanent job, the actual salary (less tax) should be increased by 50% towards future prospects, to arrive at the monthly income. Where the number of dependants of a deceased are in the range of 4 to 6, the deduction towards personal and living C expenses of the deceased should be 25%. In regard to persons aged 36 to 40 years, the appropriate multiplier should be 15. Applying the said principles, compensation in the instant case is recalculated. The compensation is increased from Rs.14,66,600/- to Rs.19, 70,250/-. The D increased amount shall carry interest at the rate of 6% per annum from the date of claim petition to the date of payment. [Paras 6 and 9] [421-B-C; 422-E] Sar/a Verma vs. Delhi Transport Corporation 2009 (6) E sec 121, relied on. 2. The deduction of 30% from the salary is correct.

Where the annual income is in the taxable range, appropriate deduction should be made towards tax. In the instant case as the annual income has been worked F out as Rs.2,48,292/-, appropriate deduction has to be made towards income-tax. The rate of income tax is a varying figure, with reference to taxable income after permissible deductions and the year of assessment. The High Court has rightly assessed the deduction as 30%. G However, it is clarified that while ascertaining the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium, repayments of loans etc., should not be excluded from the income. The deduction towards H income tax/surcharge alone should be considered to SHYAMWATI SHARMA & ORS. v. KARAM SINGH & 419 ORS. arrive at the net income of the deceased. (Para 8] (421- A H; 422-A-D] Sar/a Verma vs. Delhi Transport Corporation 2009 (6) sec 121, distinguished. B Case Law Reference: 2009 (6) sec 121 Relied on. Para 6 Distinguished. Para 8 CIVIL APPELLATE JURISDICTION : Civil Appeal No. C 5316 of 2010. From the Judgment & Order daed 20.4.2007 of the High Court of Delhi at New Delhi in F.A.O. No. 250 of 2003. R.K. Khanna for the Appellant. D A.K. Raina, Dr. Kailash Chand for the Respondent. The Judgment of the Court was delivered by R. V. RAVEENDRAN J. 1. Leave granted. E

2. This is an appeal for enhancement of compensation, by the mother, widow, three children and father of Kuldeep Sharma, a Sub-Inspector of Poli~e. aged 36 years, who died in a motor accident on 25.12.1990. According to the salary F certificate, his basic pay was Rs.7425/-, the gross salary (pay and allowances) was Rs.13,794/-, the deductions aggregated to Rs.4,305/- and the net take home salary was Rs.9,489/- per month. 3. The Tribunal by its award dated 17 .1.2003 held the G respondents liable and directed the insurer to pay to the appellants, Rs.14,44,600/- as compensation, with simple interest at 9% per annum from the date of filing of the claim petition (21.2.2002) till re-alization. The Tribunal arrived at the said compensation in the following manner : It deducted one H 420 SUPREME COURT REPORTS [20101 8 s.c:R. A third from the gross monthly salary of Rs.13, 794/- towards the personal and living expenses of the deceased and determined the contribution to the family as Rs.9, 196/- per month or Rs.1, 10,352/- per annum. It applied the multiplier '13' and arrived at the loss of dependency as Rs.14,34,576/- rounded B off to Rs.14,34,600/-.

4. Feeling aggrieved the claimants filed an appeal. The High Court started with the gross salary as Rs.13, 794/- per month. Drawing an assumption that the deceased would have at least got one promotion or gone to the next higher grade if C he had completed the remaining 24 years of service, and taking note of the recommendations of the Fifth Pay Commission and the annual increments, it inferred that by the time the deceased would have retired, he would have been earning a minimum gross income of Rs.22,000/- per month. The average of the D actual monthly income (Rs.13794/-) and the projected monthly income at the time of retirement (Rs.22000), that is Rs.17,897/ -, was taken as the monthly income. The High Court deducted 30% thereof towards 'deductions from salary' (income-tax etc.) and arrived at the net monthly income as Rs.12,528/-. It further E deducted one fourth thereof towards the personal and living expenses of the deceased and arrived at the contribution to the family as Rs.9,396/- per month or Rs.1, 12, 752/- per annum. By applying the multiplier of 13, it calculated the loss of dependency as Rs.14,65,776/-. As a consequence, it increased the F compensation awarded by the Tribunal by Rs.32,000/- with interest at the rate of 6% per annum from the date of claim petition till the date of payment. 5. The said judgment of the High Court is challenged in G this appeal. The appellants urged the following two contentions:

(i) The High Court ought not to have made a 'deduction' of 30% from the salary towards taxes etc.; and H (ii) The High Court ought to have applied the multiplier SHYAMWATI SHARMA & ORS. v. KARAM SINGH & 421 ORS. [R.V. RAVEENDRAN, J.] '16' instead of '13', having regard to the age of the A deceased. 6. This Court in Sar/a Verma vs. Delhi Transport Corporation - 2009 (6) SCC 121, has stated the principles relating to 'addition to income' towards future prospects. This B Court held that wherever the deceased was below 40 years of age and had a permanent job, the actual salary (less tax) should be increased by 50% towards future prospects, to arrive at the monthly income. It also held that where the number of dependants of a deceased are in the range of 4 to 6, the C deduction towards personal and living expenses of the deceased should be 25%. It further held that in regard to persons aged 36 to 40 years, the appropriate multiplier should be 15. We will re-calculate the compensation by applying the said principles. D ... 7. As noticed above, the gross salary was Rs.13,794/~ per month or Rs.1,65,528/- per annum. By adding 50% towards future prospects (as the deceased was less than 40 years of age), the deemed gross income would have been Rs.20,691/

- per month or Rs.2,48,292/- per annum. The percentage of E deduction towards income-tax and surcharge, taken as 30% by the High Court, does not require to be disturbed, having regard to the income. On such deduction, the net annual income of the deceased would have been Rs.1, 73,800/-. From the said sum, one-fourth (25%) had to be deducted towards the personal F and living expenses of the deceased. Thus the contribution of the deceased to his family would have been Rs.1,30,350/- per annum. By applying the multiplier of 15, the total loss of dependency will be Rs.19,55,250/-. By adding a sum of Rs.5,000/- each under the heads of loss of consortium, loss of G estate and funeral expenses, the total compensation is determined as Rs.19, 70,250/-. 8. The submission of the respondents that the deduction of 30% from the salary is not warranted in view of the decision in Sar/a Verma, is not sound. In Sar/a Verma, the monthly salary H 422 SUPREME COURT REPORTS (2010] 8 S.C.R.

A of the deceased was only Rs.4004/- and the annual income even after taking note of future prospects was Rs. 72072/-. The income was in a range which was exempt from tax, if the permissible deductions were applied. Therefore, this Court did not make any deduction towards income-tax. But this Court B made it clear that where the annual income is in the taxable range, appropriate deduction should be made towards tax. In this case as the annual income has been worked out as Rs.2,48,292/-, appropriate deduction has to be made towards income-tax. The rate of income tax is a varying figure, with c reference to taxable income after permissible deductions and the year of assessment. The High Court has assessed the deduction as 30% and on the facts, we do not propose to disturb it. We however make it clear that while ascertaining the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium,0 repayments of loans etc., shoutd not be excluded from the income. The deduction towards income tax/surcharge alone should be considered to arrive at the net income of the deceased. E 9. We accordingly allow the appeal and increase the compensation from Rs.14,66,600/- to Rs.19,70,250/-. The increased amount shall carry interest at the rate of 6% per annum from the date of claim petition to the date of payment. The parties to bear their respective costs. K.K.T. Appeal allowed.