JUDGMENT judgment of court was delivered by S. C. Dharmadhikari J.-This income-tax appeal challenges order passed by Income-tax Appellate Tribunal dated June 12, 2000. Tribunal's Mumbai Bench heard appeal of appellant-assessee being Income Tax Appeal No. 2337/Mum/1999 for assessment year 1995-96. appeal of assessee before Tribunal challenged order of Commissioner of Income-tax dated March 31, 1999. That order of Commissioner was passed by invoking powers conferred on him under section 263 of Income-tax Act, 1961 (for short "the IT Act"). This appeal has been admitted on following substantial questions of law: "(i) Whether Tribunal was justified in holding that order passed by Assessing Officer under section 143(3) read with section 144A was erroneous and prejudicial to interests of Revenue and, therefore, Commissioner of Income-tax was justified in exercising jurisdiction under section 263 of Act? (ii) Whether Tribunal was justified in holding that compensation received by appellant as per consent terms dated August 19, 1994, was on account of relinquishment of claim for specific performance and, therefore, same was liable to capital gains tax? (iii) Whether Tribunal was justified in holding that appellant's case was governed by ratio laid down in case of Vijay Flexible Containers [1990] 186 ITR 693 (Bom) and not by ratio laid down in Abbasbhoy A. Dehgamwalla [1992] 195 ITR 28 (Bom)? (iv) Whether Tribunal was justified giving in judgment on merits of case in spite of fact that Commissioner of Income-tax had directed Assessing Officer to make fresh assessment as per law?" Somewhere around June, 1989, appellant had entered into oral agreement with one M/s. Eastern Ceramics Ltd. (hereinafter referred to as "ECL") to purchase factory premises at Goregaon, Mumbai, along with vacant piece of land for total consideration of Rs. 5.80 crores and for that purpose paid Rs. 5 lakhs as earnest money on July 21, 1989. main purpose for making this investment by appellant was to give property on lease and earn lease rent. Around February, 1990, appellant entered into agreement of lease with Classical Electric Ltd. (hereinafter referred to as "CEL") for granting lease of said property, which was purchased from said ECL on terms and conditions contained in memorandum of understanding (MOU) dated February 23, 1990. During period relating to assessment year 1990-91, number of meetings took place between appellant and said ECL for finalising sale agreement but ultimately said ECL backed out of said oral agreement. appellant filed suit in October, 1990, before this court with prayer, inter alia, for specific performance and in alternative, for grant of damages for breach of said agreement. After prolonged litigation between appellant and said ECL, there was settlement between parties outside court and consent decree dated August 19, 1994, was passed, under which said ECL agreed to pay Rs. 5 crores to appellant by way of damages. In meanwhile, said CEL was pressing appellant for lease of said property as per said memorandum of understanding dated February 23, 1990. dispute arose between appellant and CEL and matter was referred to arbitrator. As per arbitration award dated September 30, 1995, by arbitrator, appellant was required to pay Rs. 15 lakhs to said CEL as compensation or damages for breach of said agreement. appellant was advised by Mr. V. H. Patil, advocate, vide his opinion dated January 9, 1996, that amount of Rs. 5 crores received by them under said consent decree from said ECL was by way of damages after breach of oral agreement and, hence, same represented capital receipt not liable to tax. Accordingly, appellant filed its return of income for assessment year 1995-96 on March 15, 1996, treating said receipt on account of damages as capital receipt. In intimation made by Assessing Officer under section 143(1), he treated said damages of Rs. 4.95 crores (net) as taxable by making prima facie adjustment. However, thereafter, he felt that taxability of said sum was highly debatable and cannot be subject matter of prima facie adjustment. Accordingly, he made reference to Commissioner of Income-tax, who confirmed his view and directed him to decide this issue in regular assessment proceedings after discussing matter with Range Deputy Commissioner of Income-tax. appellant, vide his letter dated May 24, 1996, made application to Deputy Commissioner of Income-tax (Range-21), Mumbai, under section 144A of Income-tax Act enclosing brief facts, case law, opinion of Mr. V. H. Patil, advocate and requested him to issue necessary directions to Assessing Officer with regard to taxability of receipt of Rs. 4.95 crores received by way of damages as per consent decree of this court. During course of assessment proceedings, in reply to query of Assessing Officer, appellant submitted that said receipt of Rs. 4.95 crores was capital receipt not chargeable to tax in its hands. Deputy Commissioner of Income-tax (Range-21), Mumbai, gave necessary directions to Assessing Officer, vide his order dated May 27, 1996, under section 144A of Income-tax Act which are reproduced by Assessing Officer in his assessment order. As per said directions, said receipt of damages was not taxable in hands of appellant neither as business income nor as capital gains nor as casual or non-recurring receipt. Accordingly, Assessing Officer completed assessment. Assessing Officer passed order as per directions of Deputy Commissioner of Income-tax treating said damages as capital receipt not chargeable to tax. It appears that Deputy Commissioner of Income-tax before giving directions to Assessing Officer had referred matter to Commissioner of Income-tax, then in office, who advised him to act as above. successor Commissioner of Income-tax, exercising his powers under section 263 of Income-tax Act issued notice to appellant informing that while making assessment, Assessing Officer failed to consider decision of Bombay High Court in case of CIT v. Vijay Flexible Containers reported in [1990] 186 ITR 693 (Bom) and, therefore, order passed by Assessing Officer is erroneous as well as prejudicial to interests of Revenue. It needs to be appreciated that documents filed by appellant before Deputy Commissioner of Income-tax contained reference to said decision but appellant urged that said decision is not applicable to facts of appellant's case. Commissioner of Income-tax passed order under section 263 of Income-tax Act overturning assessment order holding that this court's order in case of Vijay Flexible Containers (supra) applies to facts of appellant's case and, therefore, said damages are chargeable to tax in appellant's case. said order of Commissioner of Income-tax was challenged by appellant in appeal filed before Tribunal on various grounds, which has confirmed order of Commissioner of Income-tax. Mr. Toprani, learned advocate appearing for appellant, submits that impugned order is contrary to law. Mr. Toprani submits that on available material, Commissioner could not have concluded that order of Assessing Officer is erroneous and prejudicial to interests of Revenue. Assessing Officer made inquiries and arrived at certain conclusions which cannot be interfered with or upset merely because another view is possible. In present case, then Commissioner of Income-tax held that taxability of damages is highly debatable. If issue is debatable, it means more than one view is possible. If that is position then power under section 263 of Income-tax Act could not be invoked and exercised. exercise thereof in such circumstances would be contrary to settled principles. Mr. Toprani submits that, in this case, there was no right to claim specific performance as this court has held that appellant had no right, title or interest in suit premises. appellant had merely right to sue for which it has been awarded damages. Section 6 of Transfer of Property Act which uses same expression "property of any kind" in context of transferability makes exception in case of mere right to sue. It has made clear that right to sue for damages is not actionable claim and is not capital asset, and, therefore, damages received pursuant to right to sue is capital receipt. aforesaid view was taken in case of CIT v. Abbasbhoy A. Dehgamwalla reported in [1992] 195 ITR 28 (Bom). Therefore, on merits also, appellant's case is covered by decision of this court in case of Abbasbhoy A. Dehgamwalla (supra). Without prejudice it is submitted by Mr. Toprani that as per ratio laid down by this court in case of Thana Electricity Supply Ltd. [1994] 206 ITR 727 (Bom) holding that if there are two decisions of same High Court holding two different views then, in that case, later decision has to be followed and, therefore, later decision of this court in case of Abbasbhoy Dehgamwalla (supra) should be followed. He, therefore, submits that appeal be allowed. On other hand, Mr. Pinto, appearing for Revenue, supports view taken by Tribunal. He submits that questions of law though termed as substantial, would have to be answered on facts and circumstances of each case. In present matter, assessee relinquished claim for specific performance and received only damages or compensation for breach thereof. In such circumstances, right in immovable property was given up. Therefore, view taken by Assessing Officer was unsustainable and rightly interfered with. Therefore, law laid down by Division Bench of this court in case of Abbasbhoy A. Dehgamwalla (supra) is not applicable. questions of law be answered accordingly. We have heard both sides and with their assistance, we have perused appeal paper book. facts are not in dispute inasmuch as appellant had entered into oral agreement with ECL to purchase immovable property for total consideration of Rs. 5.80 crores. He paid Rs. 5 lakhs as earnest money on July 21, 1989. We are not concerned as much with other agreement executed by appellant-assessee. In present case and concerning assessment year in question 1990-91, some meetings took place but oral agreement, according to appellant-assessee, was not honoured. Therefore, suit came to be filed in this court in October, 1990, with prayer, inter alia, for specific performance of agreement for sale of immovable property and alternatively for grant of damages/compensation in lieu thereof. It is stated that there were some interlocutory proceedings in this suit. However, during course of appeal against certain interim orders, matter was settled and consent terms came to be drawn between parties. These consent terms, copy of which is at pages 21 to 23 of appeal paper book read as under: "Consent terms 1. Declared that plaintiffs have no right, title or interest in property described in exhibit to plaint save and except as provided herein. 2. defendants do pay to plaintiffs sum of Rs. 5 crores on or before February 28, 1995. 3. In event of defendant not paying sum of Rs. 5 crores on or before February 28, 1995, defendants to pay interest thereon at 18 per cent. per annum from March, 1 1995. 4. In event of defendants committing default in payment of decretal debt on or before February 28, 1995, suit property described in exhibit to plaint be sold in execution or towards satisfaction of decretal debt by Commissioner for taking accounts by public auction. surplus sale proceeds, if any. to be paid to defendants. 5. Till decretal debt is paid order dated July 10, 1994, to continue. 6. Save as above plaintiffs have to other claim against defendants. 7. No order as to costs. Dated this 19th day of August, 1994." Division Bench of this court accepted these consent terms and decreed suit by consent decree dated August 19, 1994. It was held that plaintiff, namely, appellant before us has no right, title or interest in immovable property, save and except right to receive sum of Rs. 5 crores and in event that is not paid, decree to that extent can be executed. In event decretal debt not being paid even suit property could be sold in execution of decretal debt. This is not matter, as held by Commissioner of Income-tax, covered by judgment of this court in case of Vijay Flexible Containers (supra). In said case, assessee-firm entered into agreement with one captain B. V. Dhuru and others on November 10, 1959, whereunder assessee agreed to purchase from said Dhuru and others immovable property described in schedule thereto at rate of Rs. 35 per square yard to be paid in manner set out. Upon execution of said agreement for sale, assessee paid to vendors as required by said agreement for sale, sum of Rs. 17,500 as earnest money. assessee was constrained to file suit in this court for specific performance of said agreement for sale or, in alternative, for damages for its breach. consent terms were arrived at in suit and decree was passed in favour of assessee for sum of Rs. 1,17,500 and interest. Income-tax Officer held that right that assessee had acquired under said agreement for sale was capital asset. Upon extinguishment of that right assessee had received sum of Rs. 1,17,500. Income-tax Officer found that deducting cost of acquisition of capital asset in amount of Rs. 17,500 and expenses and legal charges in sum of Rs. 17,904 capital gain to be Rs. 82,086. assessee was aggrieved by this order or view of Assessing Officer and, therefore, preferred appeal and in which he succeeded. first appellate authority held that agreement for sale did not bring capital asset into existence. Revenue preferred appeal against this decision before Tribunal and it was upheld. question of law was, "whether right conferred upon assessee by sale agreement of property of any kind?" It is in that context that Division Bench arrived at conclusion that right acquired is not mere right to sue. assessee acquired under said agreement for sale right to have immovable property conveyed to him. He was, under law, entitled to exercise that right not only against his vendors but also against transferee with notice or gratuitous transferee. He could assign that right. What he acquired under said agreement for sale was, therefore, property within acquired under said agreement for sale was, therefore, property within meaning of Income-tax Act and, consequently, capital asset. In suit that he filed, settlement was arrived at, at which point of time, assessee gave up his right to claim specific performance and took only damages. His giving up of right to claim specific performance by conveyance to him of immovable property was relinquishment of capital asset. There was, therefore, transfer of capital asset within meaning of Income-tax Act. It is this view which was placed before this court in case of Abbasbhoy A. Dehgamwalla (supra). However, Division Bench deciding issue in case of Abbasbhoy A. Dehgamwalla (supra) noted that once assessee's claim to specific performance of agreement was rejected then alternative claim for damages for breach of agreement even if worded receipt of that sum could be taxed as assessee's income under head "Capital gains". That could not have been taxed as such after assessee's right to obtain specific performance was extinguished when court refused to grant such relief. Thereafter, alternate argument of Revenue that right to receive damages for breach of contract represented consideration of original right has been dealt with. Division Bench concluded that even if widest possible interpretation accepted, still amount of damages cannot be taxed as capital gains. That has been held to be compensation in money for breach of contract. That, as appearing in this case, is something which will be substitution for original relief. It is in lieu of specific performance. There is no right then to claim property but to be compensated for breach of agreement to transfer immovable property and in future. Once such transfer cannot be obtained as decree for specific performance has been refused then receipt of monetary sum cannot be taxed as claimed by Revenue. This is apparent from reading of paragraphs 8 and 9 of Division Bench judgment. In these circumstances, reliance placed on another Division Bench judgment of this court need not be considered. In present appeal, Tribunal failed to note that in this case as well specific performance of agreement was refused. It is erroneously held that claim of assessee regarding specific performance had never been rejected by this court. reading of order passed by Division Bench leaves us in no manner of doubt that such decree was expressly denied. consent terms may constitute agreement or contract between parties, however, consent decree is passed after agreement is placed before court and court applies its mind and records satisfaction that terms are not contrary to law or public policy. That they can be accepted and based on that decree can be passed. Therefore, it is not agreement between parties, by which suit was disposed of but on that agreement there is seal of approval or satisfaction of court and in terms of Order XXIII, rule 3 of Civil Procedure Code, 1908. In such circumstances, even if there was any interim order in favour of assessee in present case eventually suit ended in assessee's claim for specific performance being refused and he being entitled to receive sum stipulated in this court's order in lieu of specific performance. In these circumstances, assessee was right in urging that he has no right, title or interest in immovable property. Tribunal completely misread and misconstrued this court's order. In consent terms, which are drawn up and based on which suit is decreed by court, it does not deal with rival cases on merits. There is no requirement of court then passing order and judgment on merits of claim of parties. court is required to apply its mind and consider as to whether arrangement reached by parties can be accepted by it. Once it is accepted and order or decree is passed in terms thereof then it is order of court. Thus, court has not undertaken any mechanical exercise or has not casually and lightly accepted terms and approved same. It has performed conscious act and in terms of Order XXIII, rule 3 of Civil Procedure Code, 1908. This clearly means that relief was refused. One cannot then pick up stray sentence or observation from judgment of this court and apply it to given fact situation. We find that present case was similar to that of Abbasbhoy A. Dehgamwalla (supra). In this case, this court declared that plaintiff-assessee has no right, title or interest in immovable property. That specific performance is, therefore, clearly refused. other observations of Division Bench deciding case of Abbasbhoy A. Dehgamwalla (supra) and Vijay Flexible Containers (supra) need not be considered. We do not think that assessee had any right left or remaining in him to claim immovable property, which is subject matter of oral agreement. That right got extinguished once specific performance was refused. Even if refund of earnest money or compensation is relief granted, it is apparent on reading of Specific Relief Act, 1963, that court has power to grant relief of possession, partition or refund of earnest money if any person sues for specific performance of contract for transfer of immovable property. That power is to be found in section 22 of Specific Relief Act, 1963. By section 21, court has power to award compensation in certain cases and by sub-section (1) thereof, it is clarified that in suit for specific performance of contract, plaintiff may also claim compensation for its breach, either in addition to, or in substitution of such performance. When such relief is claimed in substitution of performance then by virtue of sub-section (2) of section 21, court can award plaintiff compensation even if it decides specific performance ought not be granted. However, there are specific provisions which plaintiff must comply with. Eventually, jurisdiction to decree specific performance conferred in court is discretionary and it is not bound to grant such relief merely because it is lawful to do so (see section 20 of Specific Relief Act, 1963). agreement for sale of immovable property itself does not create any right, title or interest in immovable property, which is subject matter of such agreement but creates right to obtain performance of agreement by approaching court of law and seeking decree of specific performance in terms of Specific Relief Act, 1963. It is that limited right which is recognised by law and difference between contract for sale of immovable property and sale as emerging from section 54 of Transfer of property Act, 1882, is thus explained. In this context, following observations of hon'ble Supreme Court in case of Bai Dosabai v. Mathurdas Govinddas reported in [1980] AIR 1980 SC 1334 are pertinent. "The ultimate paragraph of section 54 of Transfer of Property Act, expressly enunciates that contract for sale of immovable property does not, of itself, create any interest in or charge on such property. But ultimate and penultimate paragraphs of section 40 of Transfer of Property Act make it clear that such contract creates obligation annexed to ownership of immovable property, not amounting to interest in property, but which obligation may be enforced against transferee with notice of contract or gratuitous transferee of property. Thus, equitable ownership in property recognised by equity in England is translated into Indian law as obligation annexed to ownership of property, not amounting to interest in property, but obligation which may be enforced against transferee with notice or gratuitous transferee." In such circumstances, we do not think that Tribunal's finding and from paragraphs 6 to 11 need to be referred to. In this case as well, specific performance was refused by this court. In any event, there was enough doubt and legal position was not clear. This was not case where power under section 263 of Income-tax Act could have been exercised. In view of above, we are of opinion that appeal must succeed. substantial questions of law, as framed and on debatable issues need to be answered as under: "Answers to question Nos.: (i) Tribunal was not justified in holding that order passed by Assessing Officer under section 143(3) read with section 144A was erroneous and prejudicial to interests of Revenue and, therefore, Commissioner of Income-tax was justified in exercising jurisdiction under section 263 of Income-tax Act. (ii) answer is in favour of assessee and against Revenue by holding that amount of compensation received by assessee-appellant was not liable to capital gains tax. (iii) It is held that appellant's case was covered by ratio of this court in case of CIT v. Abbasbhoy A. Dehgamwalla reported in [1992] 195 ITR 28 (Bom). (iv) Once we have answered issue on merits against Revenue and in favour of assessee, question No. 4 will not survive." appeal is, accordingly, allowed. No order as to costs. *** Sterling Construction and Investments v. Assistant Commissioner of Income-tax (Investigation)