Proved income in motor accident compensation should not be replaced by notional income when reliable financial records support the deceased's earnings.

In motor accident compensation claims, proved income reflected in income tax returns and audit reports cannot be replaced by notional income unless there is material showing inflation or falsity. The deceased's business receipts and income from assets could not be ignored merely because the businesses or assets were later transferred to legal heirs, where the deceased had actively managed them and his managerial contribution had economic value. For rental and agricultural income, only the portion attributable to managerial skill and supervision could be excluded, while future prospects and conventional heads were to be added under settled principles. The reduction of compensation on a notional income basis was therefore unjustified, and enhanced compensation was warranted on the basis of proven income, subject to limited deduction for managerial contribution.

---

---

Issues: Whether the compensation payable under Section 168 of the Motor Vehicles Act, 1988 had been correctly reduced by treating the deceased's income as notional and by excluding the income reflected in income tax returns and audit reports.

Analysis: Compensation under the Motor Vehicles Act is to be fair, reasonable and equitable, and the assessment of loss is a fact-sensitive exercise. Income tax returns and audit reports are reliable evidence for determining the deceased's income where there is no material to show inflation or falsity. The deceased's business receipts could not be ignored merely because the businesses or assets were later transferred to legal heirs, since the deceased had been actively involved in their management and his managerial contribution had economic value. For rental and agricultural income, only the component attributable to managerial skill and supervision could be excluded, not the entire income, and future prospects and conventional heads were also to be applied in accordance with settled principles.

Conclusion: The reduction of compensation on a notional income basis was unjustified. The appellants were entitled to enhanced compensation on the basis of the proven income, with appropriate deduction only to the extent of the deceased's managerial contribution and with future prospects and conventional heads added as applicable.

Ratio Decidendi: In motor accident compensation claims, proved income reflected in reliable financial records cannot be discarded in favour of notional income unless contrary material exists, and only the portion truly unrelated to the deceased's personal managerial contribution may be excluded while computing just compensation.

---