https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=460556 https://www.taxtmi.com/caselaws?id=460556 Challenge to Arbitral Award - quantum of compensation that is to be granted to the Appellants - determination of just compensation under a social welfare - Reliability on income tax returns and sudit reports to determine loss of income - Treatment of Income from Business Ventures and other Investments - Treatment of Income from House Property and Agricultural Land Determination of just compensation under a social welfare - HELD THAT:- Motor Vehicles Act of 1988 is a beneficial and welfare legislation that seeks to provide compensation as per the contemporaneous position of an individual which is essentially forward-looking. Unlike tortious liability, which is chiefly concerned with making up for the past and reinstating a claimant to his original position, the compensation under the Act is concerned with providing stability and continuity in peoples lives in the future. Reliability on income tax returns and sudit reports to determine loss of income - HELD THAT:- It would be pertinent to divide the income as mentioned in the audit reports into two parts - (a) Income from Business Ventures and other Investments and (b) Income from House Property and Agricultural Land. It should be emphasized that these audit reports only showcase amounts which specifically stem from the shares and interest held by the Deceased in the businesses and it is not a case wherein the entire turnover of businesses are depicted as Deceased s income. Moreover, it deserves to be clarified that the income under the abovementioned two parts have been computed at gross value as per the audit reports and includes the deductions such as interest paid on loans and expenses incurred by the deceased. Treatment of Income from Business Ventures and other Investments - HELD THAT:- The mere fact that the Deceased s share of ownership in these businesses ventures was transferred to the Deceased s minor children just before his death or to the dependents after his death is not a sufficient justification to conclude that the benefits of these businesses continue to accrue to his dependents. On the contrary, it has come on record that the Deceased was actively involved in the day-to-day administration of these businesses from their stage of infancy, had undergone specialized training to administer his business and that the audit reports neatly delineate Deceased s share of income from the businesses. These facts necessitate that the entire amount from the business ventures is treated as income. Similarly, the amount earned from the bank interests and remaining investments must also be included as income. Treatment of Income from House Property and Agricultural Land - HELD THAT:- In the instant case, documents produced on record indicate two salient aspects with respect to Lakshmi Complex , which was the sole source of rental income for the deceased. The partition deed related to the land on which the commercial building is situated, highlights that the building was constructed on account of the joint investment made by the Deceased and his partners. Furthermore, as per the rental records, Lakshmi Complex was leased out to more than ten different commercial entities. Hence, keeping in mind that - first, the rental amount which is sought to be deducted partakes the character of investment; and second, that the managerial skills required for supervising the said building would require sophisticated contract management skills and goodwill among the business community, it is necessary that we determine the value of managerial skills of the Deceased on the higher side - it is deemed appropriate to award Rs. 2,50,000/- as the amount for the Deceased s managerial skills. It is clarified that the said amount would also include the amount for the managerial skills in respect of the Deceased s agricultural lands. Conclusion - i) Income tax returns and audit reports are reliable for determining the deceased s income. ii) The deceased s active involvement in his businesses justified treating the business income as personal income. iii) Managerial skills in managing properties should be valued, and a portion of the income from such sources should be considered in the compensation. iv) Compensation must be calculated liberally, considering future prospects and personal expenses. Appeal disposed off. Case-Laws Indian Laws Fri, 30 Sep 2022 00:00:00 +0530