Page 38 - The Insurance Times November 2025

files ITR of Rs. 10,00,000/- for a year as per the new enhanced " It is no longer res integra that Income Tax Returns are
tax slab. Based on this, the loss of income would be calculated reliable evidence to assess the income of a deceased"
as follows:
The insurance companies always take the plea that the
Scenario Without ITR With ITR income shall not be calculated only on the basis of the ITR
(Based on (Declared filed and there must be some other document to substantiate
Minimum Wage) Income the income. The companies request to produce salary
Rs. 10,00,000) certificate, bank statements, joining letter of the service,
Annual Income Rs. 88,920 Rs. 10,00,000 balance sheet of the business etc. to co-relate the income
Add: 40% Future Rs. 35,568 (40% Rs. 4,00,000 with the ITR filed. However, it is very difficult in the court to
Prospects of Rs. 88,920) (40% of disregard the income based on ITR. In the case of Smt. Shanti
Rs. 10,00,000) v. Smt. Ratan Kanwar SBCMA 1525/2018, the Hon'ble
Rajasthan High Court considered the income tax returns filed
Total Adjusted Rs. 1,24,488 Rs. 14,00,000
Income by the deceased who was into furniture business.
Less: 1/3rd Self Rs. 41,496 Rs. 4,66,667 The MACT did not consider the ITR filed merely on the ground
Expenses that the registration certificate or any documentary evidence
Net Annual Rs. 82,992 Rs. 9,33,333 in support of the business undertaken by the deceased Mamraj
Income was not produced. The Hon'ble Mr. Justice Vinit Kumar
Multiplier 18 18 Mathur reflected the importance of filing ITR in the said
(Age 24) judgment by mentioning that from the business of furniture,
the deceased was having the income and for the purpose,
Total Loss of Rs. 14,93,856 Rs. 1,68,00,000
the Income Tax Returns were also produced and placed
Income
before the Tribunal and hence, there was no reason to
There is a difference of Rs. 1,54,00,000/- in the above case disbelieve the ITR.
by filing of the ITR (even without any tax liability). So, we can
conclude that if more people filing their ITR, even less than While the Supreme Court has consistently upheld the use of
the threshold limit of Rs. 12 lakhs, it will severely impact the Income Tax Returns (ITRs) as credible evidence for determining
amount of compensation. income in motor accident compensation cases, there are
instances where the Court has emphasized the necessity of
additional corroborative evidence to substantiate income claims.
Judicial decisions have consistently highlighted the significance
of documentary evidence in determining compensation Although, it is difficult to disregard the ITR, the insurance
amounts. companies shall put forth the submissions more effectively with
documentary evidences if there are drastic differences between
the ITR and the actual income. There shall be thorough
Recently, the Supreme Court in New India Assurance Co. Ltd.
v. Sonigra Juhi Uttamchand, 2025 INSC 15, while determining investigation of the income sources of the deceased/claimants
the income of the deceased therein had observed: and verification of the ITR through the department.

"8. .Monthly income could be fixed taking into account the In conclusion, the evolving judicial stance clearly establishes
tax returns only if the details of payment of tax are Income Tax Returns as a reliable and legally endorsed basis
appropriately brought into evidence so as to enable the for assessing income in motor accident compensation cases.
Tribunal/Court to calculate the income in accordance with These developments underscore the necessity of maintaining
law." accurate and consistent financial records, as such
documentation can profoundly influence the quantum. With
In the interesting case of United India Insurance Co. Ltd. v. the introduction of the enhanced income tax slab, not only
Indiro Devi & Ors. 2018 INSC 575, the deceased was working are the legal implications far-reaching, but it also serves as
in the Food Corporation of India. He filed ITR which was an incentive for more individuals to file their ITRs. This, in
higher than the salary received by him. The Supreme Court turn, ensures that compensation awards reflect the quantum
upheld the income as per the ITR for calculating compensation based on documentary proofs rather than using minimum
even if was different from the salary certificate. More recently, wages or notional income. The higher quantum of
in the case of S.Vishnu Ganga vs M/S Oriental Insurance compensation will certainly impact the underwriting process
Company Ltd, 2025 INSC 123, the Supreme Court observed: of the insurance companies.

The Insurance Times November 2025 35