TaxTMI 
TaxTMI 
2022 (9) TMI 1654
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.... determination of quantum of compensation which requires adjudication before us. A. FACTS 3. S. Kumareshan (hereinafter, "Deceased") was a resident of Tiruchirappalli, Tamil Nadu. On the fateful day, at about 4 PM in the evening, he was travelling alone in a Lancer Car bearing Registration No. TN 45 S 9199 and met with an unfortunate accident with an Ambassador Car bearing Registration No. TN 59 E 9288 along the stretch of road between Sethathupatti and Soriampattti. The collision was so powerful that the drivers of both vehicles passed away before any medical assistance could reach them. The sole survivors of the collision were occupants of the Ambassador Car, who miraculously escaped death but were saddled with multiple injuries. 4. The Deceased was aged above 31 years at the time of death and was an income tax Assessee. He was a businessman who held diverse interests in arenas such as jewellery, textiles, exports and transport. Furthermore, he also drew income from his agricultural lands and leased out real estate. At the time of his demise, he left behind a widow, two minor children and parents who were stated to be dependent on him. It is to be noted that among these depend....
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....ts cannot be said to be income earned out of the Deceased's personal skills as there was no real contribution by him. Consequently, the High Court concluded that the Deceased's dependants suffered no loss of income and instead computed the compensation by fixing his salary at Rs. 25,000/- per month on a notional basis as per his educational qualification. Furthermore, it also made minor alterations under other conventional heads and accordingly, the compensation was reduced to Rs. 57,90,000/- along with interest of 7.5% per annum. B. CONTENTIONS 8. We have heard the learned Counsel for parties and perused the documents produced on record. It must be noted that Learned Counsels for both sides have not disputed the finding concerning the Insurance Company's liability to pay the compensation. The only limited question that remains disputed before us in the present proceedings pertains to concerning the quantum of compensation that is to be granted to the Appellants. 9. Mr. K. Radhakrishnan, learned Senior Counsel for the Appellants contended that - Firstly, High Court via impugned decision has erred by computing the compensation on the basis of notional income despite t....
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....ances of each case. C. ANALYSIS C. 1 DETERMINATION OF 'JUST' COMPENSATION UNDER A SOCIAL WELFARE STATUTE 11. At the outset, it is pertinent to reiterate the concept of 'just' compensation Under Section 168 of the Act. It is a settled proposition, now through a catena of decisions Helen C. Rebello v. Maharashtra State Road Transport Corporation (1999) 1 SCC 90; United India Insurance Co. Ltd. v. Patricia Jean Mahajan (2002) 6 SCC 281; New India Assurance Co. Ltd. v. Charlie (2005) 10 SCC 720; National Insurance Co. Ltd. v. Indira Srivastava (2008) 2 SCC 763. including the one rendered by the Constitution Bench in Pranay Sethi Pranay Sethi (n 1), para 55. that compensation must be fair, reasonable and equitable. Further, the determination of quantum is a fact-dependent exercise which must be liberal and not parsimonious. It must be emphasized that compensation is a more comprehensive form of pecuniary relief which involves a broad-based approach unlike damages as noted by this Court in Yadava Kumar v. Divisional Manager, National Insurance Co. Ltd Yadava Kumar v. Divisional Manager, National Insurance Co. Ltd. (2010) 10 SCC 341, para 17. The discussion in th....
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....and Kalpanaraj v. Tamil Nadu State Transport Corpn. Kalpanaraj v. Tamil Nadu State Transport Corpn. (2015) 2 SCC 764, para 8. wherein this Court has held that documents such as income tax returns and audit reports are reliable evidence to determine the income of the deceased. Hence, we are obliged to modify the compensation, especially when neither any additional evidence has been produced to showcase that the income of the Deceased was contrary to the amount mentioned in the audit reports nor it is the stand taken by the Insurance Company that the said reports inflated the income. 15. At this stage, to facilitate our analysis, 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 h....
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....s loss of income derived under 'Income from Business Ventures and other Investments'. C. 2.2 - Treatment of Income from House Property and Agricultural Land 19. As per the audit reports, the Deceased used to draw all his rental income from the share he held in a commercial building known as 'Lakshmi Complex' and the remaining income was from his agricultural lands, which have been bequeathed to his legal heirs on his death. The audit reports indicate the amounts under the 'Income from House Property and Agricultural Land' as per follows - (i) for FY 2000-2001 is Rs. 6,90,396/- (ii) for FY 2001-2002 is Rs. 6,47,127/-(iii) for FY 2002-2003 is Rs. 6,14,329/- and (iv) for FY 2003-2004 is Rs. 4,78,240/-. The average of these amounts comes up to Rs. 6,07,523/-. 20. At this juncture, we must note the decision in Shashikala v. Gangalakshmamma Shashikala v. Gangalakshmamma (2015) 9 SCC 150. whereby this Court deducted the entire amount earned as income from house property while determining the compensation under the Act. The decision in Shashikala was a split decision because of disagreement between the bench on whether future prospects are to be considered for aw....
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....ies. 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. 23. Accordingly, we deem it 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. It is further clarified that the remaining amount which has been deducted by us includes the tax which has to be deducted in terms of the decision in Pranay Sethi Pranay Sethi (n 1), para 59.3. D. CONCLUSION 24. In light of the above discussion, income of the Deceased is computed by adding the amount awarded under the two parts (Rs. 10,93,000/- + Rs. 2,50,000/-), which comes to Rs. 13,43,000/-. In terms of Pranay Sethi16, forty per cent of the income has to be added towards future prospects, which would come to Rs. ....