Income Tax Returns: Guiding Principles for Assessing Annual Income in Motor Accident Claims

Case Snapshot

• Case Name: Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. (along with connected appeals)

• Citation: 2026 INSC 661

• Bench: Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh

• Date of Judgment: July 1, 2026

• Area of Law: Motor Accident Claims, Compensation, Assessment of Income

Judgment in Brief

The Supreme Court laid down comprehensive guidelines for assessing the annual income of deceased persons/claimants based on Income Tax Returns (ITRs) in motor accident claims. The Court held that there is a distinction between salaried individuals and self-employed/business persons. For salaried individuals, the ITR of the previous year is sufficient, while for self-employed individuals, the average of up to the previous three years' ITRs should be taken as a reference point. The Court emphasized that factors such as the nature of the business, growth pattern, potential growth, and surrounding circumstances must also be considered. Applying these principles, the Court enhanced the compensation in three connected appeals by reassessing the annual income of the deceased persons.

Relevant Facts

• The deceased, aged 39, was running his own construction business. He died in a road accident on May 29, 2018.

• The claimants (legal representatives) filed a claim petition seeking compensation under Section 166 of the Motor Vehicles Act, 1988.

• The Tribunal assessed his annual income at Rs. 15,00,000/- based on the ITR for the previous year (AY 2018-19) and awarded Rs. 2,27,00,064/-.

• The High Court reduced the compensation to Rs. 1,87,75,150/- by taking the average of the previous two ITRs (AY 2017-18 and AY 2018-19).

• Aggrieved, the claimants approached the Supreme Court.

Relevant Facts (Rajani & Ors.)

• The deceased, aged 49, was an Insurance Agent. He died in a road accident on January 8, 2017.

• The Tribunal assessed his monthly income at Rs. 40,000/- and awarded Rs. 49,77,000/-.

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