Motor accident compensation income assessment should use prior returns flexibly, with a three-year average for self-employed earners.

Income-tax returns are relevant evidence in motor accident compensation, but there is no rigid formula for assessing the deceased's annual income under the Motor Vehicles Act, 1988. For salaried persons, the preceding year's return will ordinarily suffice, subject to corroboration where a promotion or similar change is shown. For self-employed persons and business owners, income may fluctuate, so the average of up to the previous three years' returns should ordinarily be used, along with the nature of the business, growth pattern, potential growth, initial losses, and the impact of death on the business.

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Issues: Whether, for assessing the annual income of a deceased claimant under the Motor Vehicles Act, 1988, the income-tax return of the previous year alone should be adopted or the average of the previous two or three years should be taken, and what distinction, if any, should be made between salaried and self-employed persons.

Analysis: The governing objective in compensation under the Motor Vehicles Act, 1988 is to award just and fair compensation. Income-tax returns are an important reference point, but there is no rigid formula for every case. For salaried persons, the previous year's return is ordinarily sufficient, subject to corroboration where a promotion or similar change has occurred. For self-employed persons and those carrying on business, income may fluctuate, and the average of up to the previous three years' income shown in the returns should ordinarily be used, along with surrounding factors such as the nature of business, growth pattern, potential growth, negative income in initial years, and the effect of death on the business.

Conclusion: The annual income of a self-employed deceased person is to be assessed, as a general rule, on the average of the income reflected in the previous up to three income-tax returns, while the previous year's return ordinarily suffices for salaried persons; the claimant-appellants succeeded on this issue.

Ratio Decidendi: In motor accident compensation, income-tax returns are relevant evidence of earnings, but self-employed income should ordinarily be assessed on the average of up to the previous three returns, whereas salaried income may ordinarily be assessed on the basis of the preceding year alone.

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