JUDGMENT (Per T. D. Sugla, J.) These are cross-references by the Department and the assessee. The assessment year involved is 1970-71. The Income tax Appellate Tribunal has referred to this Court the following questions for opinion under Section 256(1) of the Income-tax Act, 1961 : R.A. No. 1583 (Bom)/1974-75. "Whether, on the facts and in the circumstances of the case, the amount of Rs. 2,52,000/- being the compensation received by the assessee from the Central Government can be treated as capital gains in the hands of the assessee ?" R.A. No. 1540 (Bom)/1974-75. (2) "Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,56,030/- received by the assessee as per the terms of the Consent decree dated 11.6.1969 is liable to be taxed as income of the assessee ?" (3) "If answer to Question No. (2) is in the affirmative, whether, such sum is liable to be taxed in the assessment year 1970-71 ?" It is pertinent to mention that the issue involved herein had come up for consideration in the context of wealth-tax before us in the assessee's own case for assessment years 1963-64 to 1969-70 (both inclusive) in Wealth Tax Reference No. 12 of 1977 with Wealth Tax Reference No. 5 of 1977 and by our judgment delivered yesterday it was held that both the amount of Rs. 2,52,000/- (being damages for breach of contract) and Rs. 1,56,030/- being interest thereon for the period from 30.1.1959 to the date of consent decree, i.e., 11.6.1969, had accrued to the assessee on the date of the consent decree, i.e., on 11.6.1969 and that as a result thereof no part of the amount of damages or interest was includible as 'asset' belonging to him on any of the valuation dates falling before the date of the consent decree. However, it may be desirable to briefly refer to the facts once again. The assessee had agreed to take on lease certain land and the Government of India had agreed to give it to the assessee. That was in 1945. The deal did not go through. The assessee filed Suit No. 37 of 1959 for specific performance in this Court with an alternative claim for damages for breach of contract. The suit was decreed on 20.9.1961 in terms of which the claim for specific performance was rejected. That was in 1945. The deal did not go through. The assessee filed Suit No. 37 of 1959 for specific performance in this Court with an alternative claim for damages for breach of contract. The suit was decreed on 20.9.1961 in terms of which the claim for specific performance was rejected. Holding that the breach of the contract had taken place on January 7, 1958, and the assessee was entitled to compensation for breach of contract, the suit was referred to the Commissioner of the High Court for taking accounts for the purpose of determining the amount of compensation, if any, to which the assessee may be entitled to for the breach of contract by the Union of India. The assessee accepted the judgment and decree of the learned Single Judge. But Union of India challenged the same by filing appeal before the Division Bench, inter alia, on the grounds which challenged the very existence of valid contract. Division Bench dismissed the appeal by judgment dated 16.7.1965. The Commissioner submitted his report on 29.6.1968 and recommended compensation of Rs. 10,92,000/-. This was objected to both by the assessee and the Union of India. Eventually there was a compromise between the parties and consent decree was passed on 11.6.1969 in terms of which the Union of India was directed to pay to the assessee a sum of Rs. 4,08,030/- made up of Rs. 2,52,000/- as damages and Rs. 1,56,030/- as interest at the rate of 6% of per annum from 30th day of January 1959 upto the date of consent decree. The assessee did not include any part of the amount of Rs. 2,52,000/- received by way of damages for breach of contract in his income for the year under reference. He also did not include any part of Rs. 1,56,030/- as his income on the ground that the amount was also a part of the damages. The Income-tax Officer, however, held that the assessee had an enforceable right as a result of the acceptance of his offer by the Union of India in 1945 and that the said right was acquired back by the Government of India on payment of Rs. 2,52,000/- in the year 1969. Accordingly he held that the amount of Rs. 2,52,000/- was taxable in the hands of the assessee as long term capital gains while the amount of Rs. 1,56,030/- was interest. 2,52,000/- in the year 1969. Accordingly he held that the amount of Rs. 2,52,000/- was taxable in the hands of the assessee as long term capital gains while the amount of Rs. 1,56,030/- was interest. Since it was received as a result of consent decree during the previous year, the whole of it was taxable in the year under reference. The Appellate Assistant Commissioner accepted the assessee's claim that he had no capital asset and the amount of Rs. 2,52,000/- could not be treated as capital gains. As regards the amount of Rs. 1,56,030/-, however, the Appellate Assistant Commissioner agreed with the Income-tax Officer and held that the said amount represented interest accrued and received by the assessee on the amount of compensation during the previous year and since the money was received as a result of consent decree during the previous year, it was rightly taxed in that year. Both the assessee and the Department filed appeals against the order of the Appellate Assistant Commissioner before the Tribunal. The case of the Department was that even the amount of compensation, i.e., Rs. 2,52,000/-, ought to have been taxed as capital gains. The case of the assessee was that the amount of Rs. 1,56,030/- was not taxable as the income of the assessee at all. For more or less reasons similar to that of the Appellate Assistant Commissioner the Tribunal dismissed both the assessee's and the Department's appeals. Placing reliance on the decisions of our High Court in the cases of C.I.T. Bombay City I v. Tata Services Ltd. 122 I.T.R. 594 C.I.T. v. Vijay Flexible Containers. 186 I.T.R. 693, Dr. Balasubramanian, the learned counsel for the Revenue, submitted that the assessee's right to get the deed of conveyance executed under the 1945 contract constituted a capital asset and when the amount of compensation was received by the assessee in lieu of that right, the amount so received was taxable as income under the head 'capital gains'. Dr. Balasubramanian referred to Sections 45, 48 and 2(47) of the Income-tax Act, 1961 to show that capital gain was chargeable on the transfer of a capital asset and that the word 'transfer' as defined in Section 2(47) included within it not only sale or exchange but also relinquishment of the asset and/or the extinguishment of any right therein. Dr. Balasubramanian referred to Sections 45, 48 and 2(47) of the Income-tax Act, 1961 to show that capital gain was chargeable on the transfer of a capital asset and that the word 'transfer' as defined in Section 2(47) included within it not only sale or exchange but also relinquishment of the asset and/or the extinguishment of any right therein. According to him, in the present case the assessee's right to get the deed of conveyance executed was extinguished. In lieu thereof the amount of Rs. 2,52,000/- was received as compensation. The amount was, therefore, taxable as capital gains. Shri Dastur, the learned counsel for the assessee, also referred to Sections 45 and 48 of the Act. He emphasized that under Section 45 profits or gains arising from the transfer of a capital asset were taxable as the income of the previous year in which the transfer takes place. The breach of contract in this case, he stated, took place in January 1958 as held by the learned Single Judge in his judgment and decree dated 20.9.1961. Assuming that the assessee's right to get the lease deed executed in terms of the acceptance of the assessee's offer to purchase the suit land in 1945 was capital asset and further assuming that any consideration was received as a result of the transfer of that capital asset, the breach of the contract having taken place in 1958, any part of that amount would be taxable if at all in the assessment year 1958-59 or 1959-60 and certainly not in the year under reference. This submission was in addition to the contention that the amount received herein was received as damages for the breach of the agreement and not as consideration for the 'transfer' of the capital asset under the agreement. Referring to Section 48 of the Act, Shri Dastur further contended that even if it was assumed that the amount of Rs. 2,52,000/- was received for the transfer of the capital asset under the agreement during the previous year, there being no cost of this 'capital asset' to the assessee, no part of it could be taxed as the assessee's income under the head 'capital gains' in view of the Supreme Court decision in the case of C.I.T. Bangalore v. B. C. Srinivasa Setty, 128 I.T.R. 294. Shri. Dastur further contended that in this case there was no 'transfer' at all within the meaning of Section 45 read with Section 2(47). His submission is that considering the case from any point of view, the amount of Rs. 2,52,000/- is not taxable as the income of the assessee for assessment year 1970-71 as capital gain at all. Section 45(1), as it stood at the relevant time, reads as under : "45(1) Any profits or gains arising from the transfer of a capital asset affected in the previous year shall, save as otherwise provided in sections 53, 54, 54B and 54D, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place." Shri Dastur is evidently right in contending that profits or gains arising from the transfer of a capital asset under Section 45 are to be taxed as income of the previous year in which the transfer takes place. It, thus, becomes necessary to examine as to whether the 'transfer' of the assessee's right to get the lease deed executed assuming for the present that it constituted 'Capital asset' took place during the previous year relevant for the assessment year under reference. To put it differently, when did the 'transfer' of the 'capital asset' take place. Relevant facts in brief have been mentioned in paragraph 2 of this judgment. The facts in detail are referred to in the judgment in wealth tax references disposed of yesterday. The learned Single Judge has held in his judgment and decree dated 20.9.1961 that the breach of the agreement took place on 7.1.1958 and that the suit was filed on 30.1.1959. In terms of decree passed the assessee's claim to specific performance of the agreement was rejected. As regards alternative claim for damages for breach of agreement, the Commissioner was directed to take accounts and determine the amount of compensation, if any, for the breach of the agreement. Thus, while in view of our Court's judgments in 122 I.T.R. 594 (supra) and 186 I.T.R. 693 (supra) relied upon by Dr. As regards alternative claim for damages for breach of agreement, the Commissioner was directed to take accounts and determine the amount of compensation, if any, for the breach of the agreement. Thus, while in view of our Court's judgments in 122 I.T.R. 594 (supra) and 186 I.T.R. 693 (supra) relied upon by Dr. Balsubramanian we have no difficulty in holding that such a right constituted 'capital asset', we cannot but conclude that such a right got extinguished at least on 20.9.1961 when our Court referred to grant specific performance of the agreement, if not earlier on 7.1.1958, i.e., the date of breach of contract mentioned by our Court in its decree. It may not be out of place to mention here that Dr. Balasubramanian had strenuously argued that as a result of the breach of the agreement, the assessee acquired another right, i.e., the right to receive damages and that the right originally acquired in 1945 did not really come to an end on the breach of contract but was converted into another right, i.e., the right to receive damages for breach of contract. When this right materialised and the amount of damages was specified in the consent decree of the Court, the amount so received represented the consideration for the transfer of the original right. His contention, thus, was the assessee's right to have the lease deed executed under agreement of 1945 was, as a matter of fact, extinguished during the previous year only. We find it difficult to accept this argument of Dr. Balsubramanian for more than one reason. It is a trait law that income can be held to accrue only when the assessee acquires a right to receive the income. Unlike compensation payable by the state when it acquires a citizen's land under Acts such as Land Acquisition Act where the right to receive compensation is statutory right, the right that a person acquires on the establishment of breach of contract is at best a mere right to sue. Despite the definition of the expression 'capital asset' in the widest possible terms in section 2(14), a right to capital asset must fall within the expression 'Property of any kind' and must not fall within the exceptions. Despite the definition of the expression 'capital asset' in the widest possible terms in section 2(14), a right to capital asset must fall within the expression 'Property of any kind' and must not fall within the exceptions. Section 6 of the Transfer of Property Act which uses the expression 'Property of any kind' in the context of transferability makes an exception in the case of mere right to sue. The decision thereunder make it abundantly clear that right to sue for damages is not an actionable claim. It cannot be assigned. Transfer of such a right inasmuch as it is opposed to public policy as in gambling in litigation. As such, it will not be quite correct to say that such a right constituted 'capital asset' which in turn has to be 'an interest in 'property of any kind'. The question of the assessee's right under the agreement of 1945 being converted or substituted by another right which can be said to be a 'capital asset' does not, therefore, arise. In the next place right to sue for damages for breach of contract no doubt is capable of maturing into a right to receive damages for breach of contract. But that happens only when the damages claimed for breach of contract are either admitted or decreed and not before. For this purpose the first stage is a finding as to the breach of contract. The second stage will be a finding that the party claiming damages for breach of contract has established that it suffered loss as a result of breach of that contract. The last stage is that the amount of loss established to have been suffered by the assessee is either agreed by the other party or decreed by the Court. In the present case, the learned Single Judge did not even decree for the damages. What he decreed was only this that the Commissioner was directed to take accounts and to determine the compensation payable, if any, by way of damages for the breach of contract. Thus, even at that point of time no right to receive damages as much for breach of contract accrued or can be said to accrue to the assessee, much less at the point of time there was breach of contract. Thus, even at that point of time no right to receive damages as much for breach of contract accrued or can be said to accrue to the assessee, much less at the point of time there was breach of contract. Besides, the judgment and decree of the learned Single Judge was challenged in appeal and the appeal was dismissed in the year 1965 only. Thus, even mere right to sue for damage for breach of contract could not be said to accrue to the assessee until then. The dismissal of the appeal does not certainly improve the mere right to sue qualitatively. At best, the position that the Commissioner was to take accounts for determining the amount of compensation payable by way of damages for the breach of contract, if any, revived thereby. This only meant that the Commissioner would then go into all the relevant questions and recommend damages if he is satisfied that the assessee is entitled to the damages. It is true that in the year 1968 the Commissioner submitted his report whereby he recommended damages to the extent of Rs. 10,92,000/-. However, as stated earlier, both the parties filed their objections to the report and but for the compromise reached between the parties, there would have been prolonged litigation between the parties and it is difficult to say with an amount of certainly as to what would have been the fate of litigation. In our judgment, the only reasonable conclusion is that the right to receive damages in this case accrued to the assessee on the date of the consent decree only. Since as already stated by us the right under the agreement came to an end in year 1961, if not earlier, and the right acquired in lieu thereof was only a mere right to sue, it cannot be accepted that the amount of Rs. 2,52,000/- was received as consideration for the transfer of 'capital asset's, i.e., his right to the execution of lease deed in terms of 1945 agreement, during the previous year. In that view of the matter, we are in agreement with the Tribunal that no part of the amount of Rs. 2,52,000/- was taxable as capital gains. 2,52,000/- was received as consideration for the transfer of 'capital asset's, i.e., his right to the execution of lease deed in terms of 1945 agreement, during the previous year. In that view of the matter, we are in agreement with the Tribunal that no part of the amount of Rs. 2,52,000/- was taxable as capital gains. In the premises, it is not necessary to consider other aspects of the question such as whether there was any transfer, at all or whether there being no cost of acquisition of such a capital asset, the amount was taxable. This takes us to the assessee's reference. So far as the first question is concerned, it is seen that the consent decree clearly and categorically mentions the fact that the amount of Rs. 1,56,030/- represents interest for the period from 30.1.1959 upto the date of the consent decree on the amount of damages for breach of contract determined at Rs. 2,52,000/-. The Tribunal was, therefore, right in holding that the amount of Rs. 2,52,000/- was not a part of the compensation for breach of contract merely because the decree in the first instance refer to the total amount payable as Rs. 4,08,030/- though the break up of the amount is clearly given in the following sentence. In our this view we are fortified by the decision of the Supreme Court in the case of Dr. Shamlal Narula v. C.I.T., Punjab, Jammu and Kashmir, Himachal Pradesh and Patiala, 53 I.T.R. 151 that interest on the amount of compensation is not a capital receipt but a revenue receipt. Accordingly, we answer the first question at the instance of the assessee in the affirmative and in favour of the Revenue. As regards the second Question at the instance of the assessee, compensation itself. The incongruity does not end here. Despite conclusion that interest in such cases accrues from year to year, it is doubtful whether it will be possible to hold the assessee responsible for not disclosing interest income in the past on accrual basis. The assessee can always take a stand that the amount of compensation including enhanced compensation or damages having been determined subsequently, he could not possibly anticipate accrual of interest. 15. The assessee can always take a stand that the amount of compensation including enhanced compensation or damages having been determined subsequently, he could not possibly anticipate accrual of interest. 15. In the result, the second question at the instance of the assessee is answered thus : "Only that part of the interest which pertains to the period from 1.4.1969 upto the date of the consent Decree is taxable as the assessee's income of the year under reference." There will be no order as to costs.