Court Ruling: Why Compensation from Vehicle Accidents Isn't Taxable Income

Friends,

Himachal Pradesh High Court, in its order dated 25.10.2018 (copy attached), has held that the compensation awarded under the Motor Vehicles Act or the Employees' Compensation Act in lieu of the death of a person or bodily injury suffered in a vehicular accident is considered damage and not income. Therefore, it cannot be treated as taxable income under the Income Tax Act of 1961.

Thanks

Learned member Mr. Agrawal's remarks are right. This is also extendable to compensation received from insurance companies or the owners of vehicles against claims made for injuries sustained in an accident involving vehicles, as both are similar excepting the paying authorities are different. I remember there is also a Supreme Court judgment on this. Let me trace it and post here.