Synopsis

The appellant-insurer challenged the MACT's award of Rs.77,27,864/- to the dependents of a 31-year-old deceased who died in a motor accident. The primary contention was that the MACT erred by relying solely on a single Income Tax Return (ITR) for A.Y. 2018-19 (three years prior to death) to determine the deceased's business income, instead of taking the average of the preceding three years' ITRs. The High Court dismissed the appeal, holding that: (i) the concept of average income of three years is not mandated by law; (ii) following Malarvizhi, where multiple ITRs exist, the one with the highest income should be considered; (iii) a single ITR closest to the date of death is sufficient evidence; (iv) interest on future prospects is permissible.

1. Heading of the judgment

High court of judicature at bombay civil appellate jurisdiction

First appeal no. 1699 of 2025

National insurance co. ltd. (appellant) vs. Nagma hujefa usmani & ors. (respondents)

Coram: hon’ble smt. justice aarti sathe

Core Law: Motor Vehicles Act, 1988 – Section 166 – Assessment of income – Income Tax Returns – Business income – Average income of three years – Single ITR – Future prospects – Interest on future income.

Court: High Court of Judicature at Bombay (Civil Appellate Jurisdiction)
Coram: Hon’ble Smt. Justice Aarti Sathe (Single Judge)
Date of Judgment: June 16, 2026 (Reserved on June 10, 2026)
Case No.: First Appeal No. 1699 of 2025

2. Legal framework

Major laws and provisions involved:

• Motor Vehicles Act, 1988 – Section 166 (claim for compensation)

• Income Tax Act, 1961 – Income Tax Returns (ITRs) as evidence of income

• Indian Penal Code, 1860 – Sections 304A, 279, 338

• Motor Vehicles Act, 1988 – Section 184

Subject matter of the judgment:

Whether the Motor Accident Claims Tribunal (MACT) was justified in assessing the income of a self-employed/deceased engaged in business on the basis of a single Income Tax Return (ITR) for A.Y. 2018-19, which was the document closest to the date of death (21.07.2021), or whether the Tribunal was required to take the average of the preceding three years' ITRs to determine the income for the purpose of computing compensation.

Key legal principles applied:

• Single ITR sufficient to prove income: Where the deceased was engaged in business and had filed Income Tax Returns, the MACT can rely on a single ITR to determine income, especially if it is the document closest to the date of death. The concept of "average incom

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