Interest on delayed tax refund is a separate compensatory receipt and belongs to the original assessee unless expressly assigned.

Interest on delayed tax refund was treated as a compensatory receipt for detention of money, separate from the refund itself. Because the partnership deed referred only to refunds and not to interest on refunds, the firm's entitlement to the refund did not extend to the statutory interest. The legal character of the interest remained distinct from the principal refund, so it was assessable in the hands of the deceased assessee and not as income of the firm that had taken over the business.

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Issues: Whether interest on excess tax payment refunded to the deceased assessee was assessable in his hands and not as part of the income of the firm that had taken over the business.

Analysis: Interest granted on refund under section 66(7) of the Indian Income-tax Act, 1922 was treated as compensation for the detention of money and not as an accretion to the refund itself. The partnership deed referred only to refunds and not to interest on refunds. The legal character of such interest was therefore distinct from the principal refund, and the firm's entitlement to refunds did not extend to the statutory interest paid on the refund amount.

Conclusion: The interest on the tax refund was assessable in the hands of the deceased assessee and did not become the income of the firm.

Ratio Decidendi: Interest paid on delayed refund of tax is a compensatory receipt separate from the refund itself, and does not pass to another entity merely because that entity is entitled to receive the refund unless the governing instrument expressly includes such interest.

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