The Supreme Court on Wednesday laid down guidelines for courts to determine the annual income of deceased victims or injured claimants in motor accident claims cases on the basis of their Income Tax Returns (ITRs).A Bench of Justice Sanjay Karol and Justice N Kotiswar Singh said that for salaried individuals, only the ITR of the previous year will be sufficient for showcasing the annual income while for self-employed persons, the average income disclosed in ITRs for up to previous three years should ordinarily serve as the reference point.Noting that there cannot be a rigid formula for computing annual income under the Motor Vehicles Act, the Bench drew a clear distinction between salaried employees and self-employed persons for the purpose of assessing compensation based on their ITRs.Writing the judgment for the Bench, Justice Karol said, “In the considered view of this court, there can be no hard and fast formula for computing the annual income of a deceased person/claimant. ITRs being a statutory document are an important reference point when it comes to assessing one’s income, for the purposes of compensation under the Motor Vehicle Act.”The top court accepted the suggestions made by senior lawyer JR Midha, who said, there must be a bifurcation made between salaried individuals and self-employed individuals when it comes to the assessment of annual income.These guidelines are expected to bring clarity and uniformity in the basis for award of compensation to motor accident victims by courts which have been adopting conflicting approaches on the issue.While some courts relied only on the latest ITRs, others averaged income reflected in returns for the preceding years, leading to inconsistencies in award of compensation.The verdict came on an appeal filed by the family of one Rashmirekha Tripathy against Sriram General Insurance Company Ltd seeking enhancement of the compensation payable to the claimants.The deceased, a 39-year-old construction businessman, had disclosed an annual income of about Rs 11.6 lakh and Rs 15.06 lakh in the two preceding assessment years.While the Orissa High Court had averaged the two ITRs and fixed his annual income at Rs.13.33 lakh, the top court also took into account the nature of the deceased’s construction business and fixed his annual income at Rs 14 lakh. The top court enhanced the compensation payable to his family from Rs 1.87 crore awarded by the high court to Rs 1.97 crore, while maintaining interest at six per cent per annum.YearDeaths due to road accidents (India)20181.57 lakh20191.58 lakh20201.38 lakh20211.53 lakh20221.68 lakh20231.70 lakh20241.77 lakh