I added Kdiff3 as my external diff tool in Source tree as shown in the figure.
But when I select two commits from Master and click on External Diff from Actions, kdiff3 is showing non-readable text as shown.
To compare excel files in SOurceTree, I used WinMerge (along with plugin, to compare excel files) which is a free tool from http://freemind.s57.xrea.com/xdocdiffPlugin/en/