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548 orders · Page 8 of 11
The High Court held that the lease rental receipts should be treated as income from business for the assessment years in question. The Court reasoned that the Assessee was obligated under the BIFR-approved scheme to exploit its business assets to earn income. The lease to ATL, which was in the same business, was for utilizing the Assessee's plant and machinery for manufacturing tyres. The fact that ATL reimbursed actuals, deployed the Assessee's workforce, and took over the total production indicated that the Assessee was actively engaged in earning income through its commercial assets. The Court emphasized that unless the income was treated as business income, the scheme would not yield expected results regarding losses and depreciation. The Court found the Assessee's claim justifiable, considering the circumstances and the scheme's objective of business revival. The findings of the Tribunal were deemed justifiable and warranted. Substantial questions of law numbered 3 to 5 were answered in favour of the Assessee and against the Revenue. Consequently, questions 1 and 2 were not answered, and ITA No. 757/2009 was dismissed. All other connected ITAs were also dismissed for the same reasoning.
The High Court held that the issue regarding Section 80HHC deduction is concluded in favour of the assessee by Supreme Court judgments. The Court also found that the Tribunal's finding on depreciation was a finding of fact in accordance with the depreciation schedule.
The High Court held that the substantial questions of law raised in the appeal are covered in favour of the assessee and against the Revenue, based on the principles laid down by the Supreme Court in the cited judgments. Specifically, the Court referred to Ajanta Pharma Ltd. v. Commissioner of Income-Tax, Kerala Chemicals and Proteins Ltd v. Commissioner of Income Tax, and Commissioner of Income-Tax v. Bhari Information Tech. System (P) Ltd. The Court noted that these judgments clarify that Section 115JB is a self-contained code and that the conditions in Section 80HHC(4) and (4A) are compliance conditions, not qualifying conditions. The Court found that the Tribunal's decision was in line with these Supreme Court pronouncements. Consequently, the substantial questions of law were held against the Revenue and in favour of the assessee. The appeal was dismissed accordingly.
The High Court held that the substantial questions of law raised in the appeal were covered in favour of the assessee and against the Revenue, based on the principles laid down by the Supreme Court in cited judgments, including Ajanta Pharma Ltd. v. Commissioner of Income-Tax, Kerala Chemicals and Proteins Ltd v. Commissioner of Income Tax, and Commissioner of Income-Tax v. Bhari Information Tech. System (P) Ltd. The Court noted that these judgments clarified the distinction between 'eligibility' and 'deductibility' of profits and confirmed that relief under Section 80HHC should be computed on the basis of adjusted book profit under Section 115JB, not on profits computed under regular provisions. Consequently, the questions framed in the appeal were held against the Revenue and in favour of the assessee. The appeal was dismissed.
The High Court held that the issues raised by the Revenue are covered in favour of the assessee by Supreme Court judgments. Therefore, the appeal filed by the Revenue is dismissed.
The Tribunal held that the mistake sought to be rectified under Section 154 was not an apparent mistake on the face of the record but a debatable issue. The High Court agreed that Section 154 cannot be used to correct errors that require deliberation and a change in opinion.
The High Court held that the valuation of unquoted securities by the assessee was correct, following previous judgments. However, the classification of 'rural branches' for bad debt deduction was clarified, favoring the Revenue. The ad-hoc pension payment claim was upheld in favor of the assessee.
The High Court addressed each substantial question of law. For questions 1 and 2 concerning the valuation of investments/trading assets and appreciation, the Court held that these issues were covered by the Supreme Court judgment in United Commercial Bank v. Commissioner of Income Tax, which was in favor of the assessee. For question 3 regarding pension payments, the Court found that the grounds raised by the Revenue did not merit as substantial questions of law, and the allowance of expenditure towards pension payment was rightly granted, with findings of fact not being interfered with. For question 4 concerning bad debts, the Court noted that the issue was covered by the Supreme Court judgment in Catholic Syrian Bank v. Commissioner of Income Tax, which was in favor of the assessee. For question 5 and the remaining issues regarding appreciation in the value of securities and loss on securities amortized, the Court held that these were settled by precedents like Commissioner of Income Tax v. Nedungadi Bank Ltd. and Commissioner of Income Tax v. Lord Krishna Bank Ltd., which were in favor of the assessee. The Court answered all questions of law in favor of the assessee and against the Revenue, dismissing the appeal.
The High Court held that questions 1 and 2 are covered by the Supreme Court's decision in Catholic Syrian Bank v. Commissioner of Income Tax (2012) 343 ITR 270 (SC), which answered these questions in favour of the assessee. The Supreme Court held that the proviso to Section 36(1)(vii) would not apply if the assessee does not fall under Section 36(1)(viia). Consequently, the claims for bad debts and provisions for bad and doubtful debts are allowable deductions. Question 3 is covered against the Revenue by the High Court's judgment in Commissioner of Income Tax v. Catholic Syrian Bank (2004) 265 ITR 177 (Ker), which held that penal interest paid to the RBI is compensatory in nature and not a penalty, thus an allowable deduction. Question 4 is covered against the Revenue by the Supreme Court's judgment in Commissioner of Income-Tax v. HCL Comnet Systems and Services Ltd (2008) 305 ITR 409 (SC), which clarified that provisions for bad and doubtful debts are not provisions for liabilities under item (c) of the Explanation to Section 115JA, and therefore, the Assessing Officer was not justified in adding back such provisions. All questions were answered in favour of the assessee.
The High Court addressed the substantial questions of law based on existing precedents. For questions 1 and 2 concerning bad debts and provisions for bad debts, the Court referred to the Supreme Court's decision in Catholic Syrian Bank v. Commissioner of Income Tax, which answered the question in favor of the assessee. For question 3 regarding the valuation of unquoted securities, the Court followed its own precedents in CIT v. Nedungadi Bank Ltd. and CIT v. Lord Krishna Bank Ltd., holding that the assessee's valuation based on RBI guidelines was correct and allowable. For the additional question 4 concerning the claim under Section 36(1)(viia) for advances made by branches not classified as 'rural', the Court followed its decision in Lord Krishna Bank Ltd. The Court held that 'place' in the definition of 'rural branch' refers to a revenue village, not a ward of a local authority, and that branches in municipal or corporation areas cannot be considered rural branches. Consequently, the appeal was allowed in part, with the matter remitted to the Assessing Officer for a decision on substantial question no. 4 in accordance with the law enunciated.
The Tribunal held that the disallowance of revaluation of current securities and broken period interest was incorrect, as supported by previous High Court decisions. Regarding gratuity, the Tribunal found that the amount was a payable liability and should not have been disallowed under Section 40A(7).
The High Court answered substantial questions 1 and 2 in favour of the assessee and against the Revenue. It relied on its decision in Federal Bank Ltd. v. DCIT, which in turn followed the Supreme Court's ruling in CIT v. Essar Teleholdings Pvt. Ltd. This ruling stated that the machinery provisions for Section 14A only came into effect from Assessment Year 2008-09, thus precluding its application to the subject year. For substantial question 3, the Court answered in favour of the assessee, referencing its own judgment in Commissioner of Income Tax v. Nedungadi Bank Ltd. This precedent held that securities held by an assessee-bank are stock-in-trade, and notional losses on their revaluation are allowable deductions. The Tribunal's finding that the securities were stock-in-trade was thus upheld. The appeal was dismissed.
The High Court held that for substantial question no.1 (depreciation on government securities) and substantial question no.3 (loss on redemption of securities), the Tribunal was correct in its findings. The Court relied on its previous decisions in Commissioner of Income Tax v. Nedungadi Bank Ltd and Commissioner of Income Tax v. Lord Krishna Bank Ltd, which established that securities held by banks constitute their stock-in-trade or investment, and losses arising from their valuation are allowable deductions. For substantial question no.2 (bad debts under Section 36(1)(viia)), the Court, following its decision in Commissioner of Income Tax v. Lord Krishna Bank Ltd, held that the definition of a 'rural branch' should be based on the revenue village as the unit, with a population of less than 10,000, rather than wards of local authorities. Consequently, the matter was remitted to the Assessing Officer for re-determination of the claim in accordance with this principle. The appeal was allowed-in-part.
The High Court held that the substantial question of law framed in the appeal is answered in favour of the assessee and against the Revenue. The Court relied on the Supreme Court's judgment in Catholic Syrian Bank v. Commissioner of Income Tax (2012) 343 ITR 270 (SC). The Supreme Court had held that the proviso to Section 36(1)(vii) and clause (v) of Section 36(2) are significant, and if an assessee's case does not fall under Section 36(1)(viia), the proviso/limitation would not come into play. Consequently, the High Court dismissed the Income Tax Appeal filed by the Revenue.
The High Court held that the substantial question of law regarding broken period interest (Question 1) is covered in favour of the assessee by the High Court's own judgments in Commissioner of Income Tax v. Nedungadi Bank Ltd. and Commissioner of Income Tax v. South Indian Bank. The Court noted that these judgments held that securities held by banks are stock-in-trade and notional loss on revaluation is an allowable deduction. Questions 2 and 3, concerning the deduction under Section 36(1)(viia) for bad and doubtful debts, were held to be covered in favour of the assessee by the Supreme Court's judgment in Catholic Syrian Bank v. Commissioner of Income Tax. The Supreme Court had clarified the applicability of the proviso to Section 36(1)(vii) and the conditions for claims under Section 36(1)(viia). Consequently, all substantial questions of law were answered in favour of the assessee and against the Revenue. The appeal filed by the Revenue was dismissed.
The High Court held that the substantial questions of law are answered in favour of the assessee and against the Revenue. For the first question regarding broken period interest, the Court followed the High Court judgments in Commissioner of Income Tax v. Nedungadi Bank Ltd. and Commissioner of Income Tax v. South Indian Bank, which held that securities held by banks are stock-in-trade and notional loss on revaluation is an allowable deduction. For the second and third questions concerning deductions under Section 36(1)(viia) and bad debts, the Court referred to the Supreme Court judgment in Catholic Syrian Bank v. Commissioner of Income Tax. This judgment clarified that the proviso to Section 36(1)(vii) and clause (v) of Section 36(2) are not applicable if the assessee's case falls under Section 36(1)(viia). Consequently, the claims of the assessee were allowed. The Income Tax Appeal was dismissed.
The High Court held that both substantial questions of law raised by the Revenue are covered by existing judicial pronouncements and are to be answered in favour of the assessee. Regarding the first question concerning the deduction under Section 36(1)(viia), the Court referred to the Supreme Court's decision in Catholic Syrian Bank v. Commissioner of Income Tax, which allowed such claims in favour of the assessee. The Court noted that the Supreme Court's operative portion directed that all matters be remanded to the Assessing Officer for computation in accordance with law, in light of the judgment. For the second question concerning broken period interest, the Court relied on the Kerala High Court's judgments in Commissioner of Income Tax v. Nedungadi Bank Ltd. and Commissioner of Income Tax v. South Indian Bank. These judgments held that securities held by banks are stock-in-trade, and notional loss on revaluation is an allowable deduction. Consequently, the Court answered the questions of law in favour of the assessee and against the Revenue. The appeal filed by the Revenue was dismissed.
The High Court held that the assessee's claims for bad debts under Section 36(1)(viia) and the revaluation of unquoted securities were allowable deductions. The court followed Supreme Court and High Court precedents on these matters.
The High Court, following the Supreme Court judgment in Catholic Syrian Bank v. CIT, held that the assessee's claim under Section 36(1)(viia) was eligible for deduction. The question of law was answered in favour of the assessee.
The Tribunal held that the assessee was entitled to the deduction under Section 36(1)(viia) and the broken period interest. The High Court, following Supreme Court and High Court judgments, agreed with the Tribunal's decision.
The Tribunal held that the investments in approved government securities formed part of the stock-in-trade, making the revaluation claim allowable. It also ruled in favour of the assessee regarding bad debts under Section 36(1)(viia).
The High Court held that the broken period interest is an allowable expenditure as securities are stock-in-trade. It also held that the claim under Section 36(1)(viia) is allowable, following Supreme Court precedents.
The High Court of Kerala allowed the appeal filed by The Udma Service Co-operative Bank Ltd. No. C319. The Court's decision was based on the joint submission of both the appellant and the respondent revenue. They agreed that the view taken by the Income Tax Appellate Tribunal in the order dated 26.08.2015 (in ITA No. 248/Coch/2015) was unsustainable. The Court accepted the statement that the appeal could be allowed in terms of the judgment in The Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut and another [2021 (1) KHC 303]. Consequently, the appeal was allowed in terms of the aforementioned reported judgment. No order as to costs was made. The specific issue decided by the Tribunal and the amount in dispute were not detailed in the judgment.
The High Court of Kerala, in view of the submissions made by the learned Standing Counsel for the respondents, quashed and set aside the impugned order at Ext.P5. The matter was remitted for fresh consideration to the 2nd respondent (The Commissioner of Income Tax). The petitioner was directed to appear before the 2nd respondent on July 19, 2021, at 11:00 AM and to abide by further directions. The Court noted that the petitioner shall cooperate with the 2nd respondent for expeditious decision-making. The writ petition was disposed of accordingly. No specific finding was made on the merits of the original dispute, as the matter was remitted.
The High Court of Kerala, in view of the submissions made by the learned Standing Counsel for the respondents, quashed and set aside the impugned order at Ext.P8. The matter was remitted for fresh consideration to the 2nd respondent (The Commissioner of Income Tax). The petitioner was directed to appear before the 2nd respondent on 19.07.2021 at 11:00 AM and to abide by further directions. The petitioner was also directed to cooperate with the 2nd respondent for expeditious decision-making. The principle derived is that where a tax authority concedes to a violation of natural justice and agrees to a fresh adjudication, the High Court will facilitate this by quashing the impugned order and remitting the matter for fresh consideration.
The High Court of Kerala noted that the appellant's counsel, Adv. Raja Kannan, stated that the appellant did not press the Income Tax Appeal. A statement to this effect was placed on record. Consequently, the Income Tax Appeal was dismissed as withdrawn. No decision was made on the merits of the underlying ITAT order. The operative direction was the dismissal of the appeal.
The High Court noted that Adv. Raja Kannan, appearing for the appellant, did not press the Income Tax Appeal. A statement to this effect was placed on record. Consequently, the High Court dismissed the Income Tax Appeal as withdrawn. No decision was made on the merits of the case or the underlying issues that might have been raised in the original appeal before the ITAT. The operative direction was to dismiss the appeal.
The High Court held that the CIT(A) erred in appreciating the effect order and the consequential deduction and quantification under Section 80HHB. The Court found that by virtue of the Tribunal's decision accepting the assessee's claim for loss on revaluation and sale of government bonds, these items should have been deleted from the gross total income. Consequently, the quantification under Section 80HHB should have been done correspondingly. The Court noted that the CIT(A)'s reasoning in Annexure-I was not supported by the record. The Court concluded that the deduction under Section 80HHB quantifying order dated 28.07.2003 (the effect order) was correct and should not have been reversed by the CIT(A). Therefore, the questions of law were answered in favour of the Revenue and against the assessee. The appeal was allowed, restoring the Assessing Officer's effect order dated 28.07.2003.
The Tribunal erred in disallowing freight charges as the amendment to Section 194C regarding TDS for payments to individuals was effective from June 1, 2007, and thus not applicable for the assessment year in question. However, the disallowance of commission and addition for unexplained expenditure were upheld due to lack of supporting evidence from the assessee.
The High Court held that the RBI/ECGC bonds received by the assessee could not be treated as capital assets. It reasoned that these bonds were received in substitution of business receivables from the Iraqi Government through Ircon, and the assessee had no choice or freedom to invest surplus money in such bonds. The bonds were accepted obligatorily in lieu of receivables, as non-acceptance would have meant non-realization for an uncertain period. The Court agreed with the Tribunal that the bonds were not stock-in-trade and, until sold, could not be treated as capital assets. The assessee consistently recorded notional loss or profit on revaluation in previous years, and this pattern was followed in the current assessment year. Considering the nature of the assessee's business and the circumstances, the bonds were rightly treated as current assets. The Court found the Tribunal's finding of fact to be proper and correct, agreeing with its reasoning that the assessee was forced to accept the bonds and had no option but to treat them as current assets. Therefore, the questions of law were answered in favour of the assessee.
The High Court held that the questions of law in ITA No. 279/2009 for the Assessment Year 1993-94 were to be answered in favour of the assessee and against the Revenue. This decision was based on the principle points of reference that had already been answered in favour of the assessee by the same Court in a separate judgment concerning ITR No. 264/1997 for the Assessment Year 1986-87. The Court noted that the issues of accounting standards and deferred payment arrangements were substantially covered by the prior decision. Furthermore, a few other questions raised by the Revenue were not pressed and were deemed not to arise for consideration in light of the Tribunal's findings of fact. The appeal was therefore dismissed.
The High Court disposed of the writ petition with a direction to the 2nd respondent (National Faceless Appeal Centre) to decide the stay petition filed by the petitioner in the statutory appeal within a period of three months from the date of communication of the order. The Court also directed that till the disposal of the stay petition, the respondents should defer proceedings for recovery of the amount determined by the assessment order. The petitioner was also directed to cooperate with the respondents for the expeditious disposal of the stay petition. The Court did not decide on the merits of the assessment order or the stay petition itself, but rather on the procedural aspect of deferring recovery.
The High Court of Kerala, recording the request made by the appellant, allowed the appeal to be withdrawn. The reasoning was based on the appellant's submission that they had applied under the Vivad Se Viswas Scheme, 2020, their application was accepted, and tax arrears were settled. Consequently, they were permitted to withdraw the appeal as stipulated under Section 4(3) of the Direct Tax Vivad Se Viswas Act, 2020. The operative direction was to allow the appeal to be withdrawn. No issues were left undecided.
The High Court of Kerala disposed of the writ petition by issuing directions to the 3rd respondent, the Commissioner of Income Tax (Appeals). The Tribunal directed the 3rd respondent to decide the pending stay application (Ext.P3) filed in the statutory appeal (Ext.P2) within a period of two months from the date of communication of the order. Crucially, the Court ordered that until the disposal of the stay petition, the respondents shall defer any recovery proceedings initiated pursuant to the assessment order (Ext.P1). The judgment did not delve into the merits of the assessment order itself, focusing solely on the procedural aspect of recovery pending appeal.
The High Court of Kerala acknowledged that the petitioner has filed a statutory appeal along with a stay petition challenging the assessment order, and these are pending before the 3rd respondent. Considering this pendency, the Court directed the 3rd respondent to decide the pending stay application (Ext.P3) within a period of two months from the date of communication of the order. Furthermore, the Court ordered that until the disposal of the stay petition, the respondents shall defer any recovery proceedings initiated pursuant to the assessment order (Ext.P1). The operative direction is to stay recovery proceedings pending the disposal of the stay application by the appellate authority.
The High Court considered the fact that a statutory appeal and a stay petition were pending before the 3rd respondent. The Court directed the 3rd respondent to decide the pending stay application (Ext.P3) within two months from the date of communication of the order. Crucially, the Court ordered that until the disposal of the stay petition, the respondents shall defer any recovery proceedings initiated pursuant to the assessment order (Ext.P1). The principle established is that recovery actions should be postponed pending the decision on a stay application filed along with a statutory appeal, to ensure that the appellate process is not rendered nugatory.
The High Court held that the applicable questions of law, as referred in ITA No. 12/2000, are to be answered in favour of the assessee and against the Revenue. This decision is based on the Court's prior judgment in ITR No. 264/1997, which dealt with similar principal points of reference concerning accounting standards and deferred payment arrangements. The Court noted that a few other questions were not pressed. After reviewing the record, the Court found that some questions did not actually arise for consideration, given the findings of fact recorded by the Tribunal. Therefore, the point is answered in favour of the assessee and against the Revenue. The appeal itself was dismissed.
The High Court referred to its prior judgment in a connected case (ITR No. 264/1997) where similar questions were answered in favor of the assessee. Consequently, the questions of law in these references were also decided in favor of the assessee.
The High Court held that the choice of accounting method normally rests with the assessee, and they can follow different systems for different sources or change their method, provided the change is bona fide and not for tax evasion. The Court noted that it was not the Revenue's case that the assessee's adopted accounting system warranted disregard or that the change was not bona fide. Regarding the first two questions, the Court found that the assessee had rightly adopted the completed contract system for the work in Iraq given the facts and circumstances, and therefore, certified bills could not be recognized as receipts and brought to tax in AY 1986-87. The mercantile system was not mandated to curtail the assessee's discretion. Concerning the third question, the Court, relying on the Tribunal's findings, held that the certified bills, in light of the deferred payment agreement, did not create an enforceable right in the assessment year. The Court answered all questions in favour of the assessee and against the Revenue.
The High Court of Kerala disposed of the writ petition with specific directions. The Court directed the 3rd respondent (Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi) to decide the pending application for condonation of delay (Ext.P3) within four months from the date of the order. If the occasion arises, the Court also directed the 3rd respondent to decide the application for stay (Ext.P4) within the same period, after hearing the petitioner. The Court emphasized that the petitioner should cooperate with the respondents for the expeditious disposal of the applications and, if necessary, the main appeal. Crucially, the Court ordered that until the disposal of the application for condonation of delay, and if required, the stay petition, the respondents shall not initiate any coercive steps or recovery of the amount determined by the assessment order (Ext.P1). The Standing Counsel was directed to communicate the judgment to the concerned respondent for compliance. No issue was expressly left undecided.
The High Court referred to its prior judgment in a connected case (ITR No. 264/1997) where similar questions were answered in favor of the assessee. Consequently, the questions of law in these references were also decided in favor of the assessee.
The High Court referred to its prior judgment in a connected case (ITR No. 264/1997) where similar questions were answered in favor of the assessee. Consequently, the questions of law in these references were also decided in favor of the assessee.
The High Court referred to its prior judgment in a connected case (ITR No. 264/1997) where similar questions were answered in favor of the assessee. Consequently, the questions of law in these references were also decided in favor of the assessee.
The High Court of Kerala disposed of the writ petition with a direction to the 3rd respondent (Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi) to decide the pending stay petition (Ext.P3) within a period of four months from the date of the judgment, after hearing the petitioner. The Court also directed that until the disposal of the stay petition, the respondents shall not initiate or continue recovery proceedings for the amount determined by the assessment order (Ext.P1). The petitioner was directed to cooperate with the respondents for the expeditious disposal of the stay petition and the appeal. The Standing Counsel for the respondents was directed to communicate the judgment to the concerned respondent for compliance. The Court did not decide the merits of the appeal or the validity of the assessment order.
The High Court referred to its prior judgment in a connected case (ITR No. 264/1997) where similar questions were answered in favor of the assessee. Consequently, the questions of law in these references were also decided in favor of the assessee.
The High Court, considering the CBDT Circular and its previous decisions, found the appeal to be dismissible. Both parties agreed to this course of action.
The High Court held that the denial of the right to cross-examine resulted in prejudice to the dealer, making the penalty order illegal. The Tribunal's reasoning was found to be insufficient in addressing this prejudice.
The High Court held that the assessee acted as a conduit or postman, not as an agent paying commission. Therefore, Sections 194G and 194H were not attracted, and consequently, Section 40(a)(ia) was also not applicable.
The High Court held that the substantial questions of law framed by the Revenue did not arise for consideration, primarily because the Revenue failed to establish the basic ingredients required for attracting Sections 194H or 194G to the controversy. The Court affirmed the findings of the CIT(Appeals) and the Tribunal that Sections 194H and 194G were not attracted. The assessee, as a wholesale dealer/stockist, purchased lottery tickets from the government and sold them to retailers. The amount in dispute was incentive payable by the organizing department to the agent, and the assessee acted as a post-office, receiving counterfoils of prize-winning tickets, presenting them to the government, receiving incentive, and transferring it to retailers. The Court found that the assessee was not under an obligation to pay commission to these persons, and the element of agency was absent. Therefore, the disallowance made by the AO under Section 40(a)(ia) was deleted. The Court noted that the decision was fact-specific and not to be relied upon as a precedent on the applicability of these sections to lottery businesses in general.
The High Court, considering the limited relief sought by the petitioner, disposed of the writ petition by directing the 2nd respondent (Income Tax Officer, Exemption Ward-Alappuzha) to consider Exhibit P7, the rectification application, and pass orders thereon as expeditiously as possible, and at any rate, within three months from the date of receipt of a copy of the judgment. The Court further directed that recovery proceedings pursuant to Exhibit P6 shall be kept in abeyance until orders are passed on Exhibit P7. The petitioner is required to furnish a copy of the writ petition and the judgment to the 2nd respondent. The specific finding on the merits of the rectification application itself was not made, as the court was directing its consideration.