I.T.AS. NOS. 195/KB TO 199/KB OF 1999-2000 VS I.T.AS. NOS. 195/KB TO 199/KB OF 1999-2000, 2000 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1181 (1999)

Income Tax Ordinance (XXXI of 1979)---------

----First Sched,. Part I, para. A, proviso (f)---Credit of super-tax to partners of firm ---Assessees were partners in a registered firm---Total income in the hands of assessees were determined by the Assessing Officer on the basis of assessment finalized in the case of firm---While computing tax liability of each partner under proviso (f) of para. A of Part I of First Sched of the Income Tax Ordinance, 1979, full credit of share of super-tax was not allowed by the Assessing Officer and as a result refund was not determined in the hands of individuals out of the share of super-tax paid by the firm-- Validity---Firm and partners were different entities/persons for the purpose of income-tax---Super-tax paid by firm was not refundable in the hands o1 partners---Directions of First Appellate Authority to refund such amount was vacated and order of Assessing Officer was restored by Appellate Tribunal,

1985 PTD 401 and 1992 PTD 1632 rel.

I.T.As.Nos.388 to 390/KB of 1987-88; I.T.As. Nos.391 to 393/KB; I.T.A. No. 1129/KB of 1988-89; I.T.As. Nos.383 and 384/KB of 1989-90 and I. T. A. No.302 of 1997 per iucuriam.

Ali Akbar Depar, D.R. for Appellants.

Minoo Bamjee, F.C.A. and Anthony Santamaria, I,T.P. for Respondents.

Date of hearing: 10th December, 1999.

ORDER

MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN). ---All the above appeals arise out of same set of facts and circumstances and a common question of law is involved, therefore, all the appeals have been heard together and are disposed of by this single consolidated order.

2. Briefly stated the relevant facts are that all the respondents are partners in the registered firm. In their respective returns of income in the status of individual, they declared their income representing share income from registered firm. No other source of income was disclosed. The Assessing Officer determined the total income in the hands of individual respondent on the basis of assessment finalised in the case of firm and the respective share income of the respondents. The Assessing Officer thereafter computed the tax liability by a common formula. For the sake of convenience the method adopted by the Assessing Officer in the case of Mr. Maneek Rustam Kakalia is reproduced below:---

Income tax payable by the assessee including his share in super tax payable by the firm exceeds 35% of the total income and as such tax is computed,

COMPUTATION OF TAX UNDER

PROVISIO 'E' TO PARAGRAPH 'A'

3. In the case of all the respondents similar method was adopted. The respondents feeling aggrieved, preferred, first appeal contending that the computation of tax made by the DCIT was erroneous. It was pleaded that while computing tax liability under proviso (f) of the Paragraph A of Part-I of the First Schedule, the Assessing Officer has not allowed full credit for share in the super tax. For the sake of convenience the figures are being quoted in the case of Mr. Maneek Rustam Kakalia only. It was contended that the share in super tax paid by registered firm was at Rs.1,54,120 while credit was given at Rs.1,37,697. At this juncture we would like to observe that although in the grounds of appeal before the first appellate authority, the refund was not claimed specifically, but by indirect method refund was sought out of the super tax paid by the firm.. It was contended during the arguments before the learned CIT(A) that while calculating the tax liability the Assessing Officer has assigned no reason for not allowing credit for appellant's share in super tax' paid by the firm. It was further contended that similar issue has been decided by the Income Tax Appellate Tribunal in favour of assessees vide order, dated 8-4-1996 in I.T.As. Nos.388 to 390/KB of 1987-g8 and vide order, dated 21-6-1997 in I.T.As. Nos.391 to 393/KB.

4. The contentions found favour with the learned CIT(A) Zone-VI, Karachi. The learned CIT(A) held as follows:---

"Arguments advanced by the learned A.R. carry force of law. It is observed that Assessing Officer has assigned no reasons, for not allowing full credit for appellant's share in super-tax payable by the firm. The law as laid down, in Para. (f) of Paragraph A of Part-I of the First Schedule to the Income Tax Ordinance, 1979, shows that while computing maximum tax liability of a Partner of a Registered Firm, credit for share in super tax payable by the firm is to be allowed.

In the facts and circumstances of the case, and the case-law referred, it is held that the appellant is entitled to a full credit of share in super tax payable by- the firm. "Therefore, the Assessing Officer is directed to allow credit for Appellant's share in super tax payable by the firm."

5. The department feeling aggrieved has preferred these appeals before us. It has been contended on behalf of department that the Hon'ble Sindh High Court has already decided vide judgment reported as 1985 PTD 401 that while computing the maximum tax liability of a partner no refund of the super tax paid by the firm can be allowed to the partner. It is further contended that the view has been upheld by the Hon'ble Supreme Court of Pakistan in the judgment reported as 1992 PTD 1632. On the other hand M/s. Minoo Hamji, F.C.A. and Anthony Santamaria, I.T.P., learned representatives for the respondents have submitted that the ratio in the judgment of Hon'ble Sindh High Court and Hon'ble Supreme Court of Pakistan referred to above. in the case of Soli M. Cowasjee and others is restricted to the case where a partner suffers overall loss and is not extended to the cases where partner has not suffered overall loss. They have further submitted that this view has been accepted by various Benches of the Tribunal. They have placed reliance on the following judgment:---

(i) mI. T. A. No. I129/KB of 1988-89 ITO v. Ardeshir R. F. Cowasjee, dated 19-11-1995.

(ii) I.T.As. Nos.388-390/KB of 1987-88 Re: Ms Feroza T. Markar, dated 8-4-1996

(iii) I.T.As: Nos.383-384/KB of 1989-90 Re: Mr. Cyrus H. Cowasjeedated 3-6-1997.

(iv) I.T.As. Nos.391 to 392/KB of 1987-88 Re: Miss Niloufar J. Markar, dated 21 -6-1997

6. The learned representatives for the respondents have further contended that the department preferred appeal against the order of Tribunal in the case of Miss Niloufar, J. Markar before the Hon'ble Sindh High Court vide I.T.A. No.302 of 1997 and the appeal was dismissed vide order, dated 3-3-1999.

7. We have carefully considered the contention raised by the learned representatives for the parties and have gone through the judgments cited before us. After very anxious consideration we are of the considered opinion that the question of refund in the hands of partners out of the super tax paid by the firm stood decided against the assessee by the Hon'ble Sindh High Court in the judgment reported as 1985 PTD 401 and the said judgment has been affirmed by the Hon'ble Supreme Court of Pakistan vide judgment reported as 1992 PTD 1632. However, in all the subsequent judgments of this Tribunal the ratio of above judgment has not been correctly followed due to indifferent attitude of the D.Rs. and their concession that the ratio of judgment of Hon'ble Sindh High Court and Hon'ble Supreme Court of Pakistan is applicable in such cases only where a partner has suffered overall loss. We are further constrained to observe that due to framing of wrong question before Hon'ble High Court in I.T.A. No.302 of 1997 and lack of assistance it has been held that the order of refund made by the Division Bench of this Tribunal in the case of Miss Niloufar, J. Markar was in accordance with the pronouncement made by the Hon'ble High .Court in the case of CIT v. Soli N . Cowasjee.The Judgment of Hon'ble High Court in 3-3-1999 on the face of it is per incuriam which we will present show.

8. As both the parties areplacing reliance on the judgments of Hon'ble Sindh High Court and Hon'ble Supreme Court in the case of Soli M. Cowasjee and all. subsequent judgments of this Tribunal and the judgment of Hon'ble High Court cited before us are based on the above judgment, therefore, first we would like to discuss the facts and circumstances in the above case and the decision by the Hon'ble High Court and Hon'ble Supreme Court of Pakistan.

9. The relevant facts in the case of Soli M. Cowasjee were that the assessee was partner in various firms. Some of the firms had paid super tax which was ,apportioned between the partners as per their respective shares. In respect of payment made by the firm. There were two controversies, one, to the proportionate shard of the super tax among the partners and other on the question whether the partners who had suffered losses and who were not liable to pay any tax can claim the refund of their respective shares of super tax paid by the firms and debited to them. So far the first controversy is concerned, it is not relevant for our purposes in these appeals and, therefore, the facts relevant to the other controversy shall be considered only. The Assessing Officer did not accept the plea that the partner was entitled to claim refund of his respective share of super tax paid by the firm, as the partner in his individual capacity had suffered losses. The Appellate Assistant Commissioner of Income Tax directed that in the event of there being losses in the hands of partner and no tax having been found payable by him, his share of super tax paid by the firm should be refunded: The ITAT upheld the view and, therefore, the department filed reference, before the Hon'ble Sindh High Court raising the following question of law----

"Whether under the facts and in the circumstances of the case, the learned Tribunal Was justified in holding that while working out proportionate share of super tax attributable to each partner of the total super tax should be allocated to the partners of the firm in the profit sharing capacity and not as laid down in section 16(1)(b) of the Income-tax Act, and whether in the event of partners having lower income or losses, the super tax paid by the registered firm, can be reduced or refunded to the partners?"

10. It was contended on behalf of assessee before the Hon'ble Sindh High Court that by virtue of proviso (ii) of Part-I of the Third Schedule to the Act, read with section 48 of the Act, the assessee was entitled to refund of super tax paid by the firm concerned on his behalf if he was not liable to pay tax on account of overall losses sustained by him in various business concerns.

11. The Hon'ble High Court in order to appreciate the contention, examined all the relevant provisions in the repealed Income-tax Act, 1922 including section 48 which deals with the refunds. The Hon'ble High Court did not agree with the plea raised on behalf of assessee and held as follows:--

"We are unable to agree with the above contention of Mr. Ali Athar and with the view found favour with the learned Income-tax Tribunal. In our view, the proviso provides maximum limit of the liability of a tax payer by providing that his total liability of income tax which will include super tax shall not exceed 75 %. It does not provide that an assessee will be entitled to the refund on the super tax in case overall he suffers loss in a particular assessment year. It may be pointed out that section 24 of the Act provides the cases where an assessee can claim set-off or carry forward the loss of one assessment year to the subsequent assessment year. The above section does not admit the claim of refund of super tax on the ground that the assessee partner has suffered overall loss in a particular year. We are also inclined to hold that section 48 of the Act has no application to the present case as under the above section any individual, Hindu undivided family, company, local authority, firm or other association of persons or any partner of a firm or member of an association may claim the refund if the amount of tax paid by him or on his behalf or treated as paid on his behalf for any year exceeds the amount with which he is properly chargeable under the Act. In the present case it is not disputed that the firm was charged with the proper super tax on the basis of computation of the Income of the firm concerned and that there was no mistake in the calculation or otherwise. The claim for the refund is not made because the firm concerned was not liable to pay the super tax charged from it but for the reason that the partner overall had suffered loss in the particular assessment year and, therefore, was entitled to claim the refund on the super tax paid by the firm concerned on his behalf. It may be pertinent to observe that the liability to pay super tax is of the firm though the amount of super tax paid by the firm is apportioned among the partners in proportion of their profits sharing capacity. In our view, section 48 has no application to the present case."

12. In the concluding para. of the judgment, it was held as follows:---

"For the foregoing reasons, our answer to the first part of above quoted question is that the Tribunal was justified in holding that while working out proportionate share of the super tax attributable to each partner, super tax should be allocated to the partners of the firm in the profit sharing capacity and not with reference to section 16(1)(b) of the Act. However, our answer to the second part of the above question is that under the proviso a partner can claim refund or the tax amount (which includes Income tax and super tax) in excess of 75 % or in excess of any other specified maximum percentage in the Finance Act of the relevant assessment year, of the income, for bringing down his total liability maximum of 75% or other specified percentage but he cannot claim the refund of the super tax on the ground that his overall income was low or that overall he has suffered loss."

13. The assessee feeling aggrieved preferred appeal before the Hon'ble Supreme Court of Pakistan. The Hon'ble Supreme Court considered the finding of Tribunal which was as follows:---

"So far as the second issue is concerned, it is obvious that in case the partner's total income is a loss, no tax will be payable by him and as in accordance with the relevant provision of Finance Act the tax payable by a partner has to be calculated by taking into account the portion of super tax paid by the registered firm, appropriate to the partners, share, the logical conclusion would be that where no tax is payable by the partners, the super tax paid by the firm on his behalf should be the extra payment which would be uncalled for and must be deemed as part of the taxes attributable to the partner so that the refund thereof would become a necessary result. Otherwise a partner suffering loss will still have to pay super tax in violation of the relevant provisions of the Finance Act although his liability to tax would be nil. This obviously cannot be the intention of the legislature, which has already provided a deduction to the partner of this part of the taxes paid by the firm. In this view of the matter no exception can be taken to this direction of the Appellate Assistant Commissioner either. The departmental appeals must accordingly fail. "

14. The leave was granted by the Hon'ble Supreme Court to consider the following questions:---

(i) Whether the High Court was right in holding that the petitioner was not entitled to refund of his share of super tax paid by the registered firm of which tie was a partner in view of the provisions of clause (ii) of Part-I of the Third Schedule to the. Income-tax Act, 1922 read with section 48; and

(ii) Whether in view of section 48 of the Income-tax Act, 1922 was there any need to make specified provision for refund in proviso (ii) of Part-I of the Third Schedule to the said Act."

15. It was contended before the Hon'ble Supreme Court on behalf of assessee that when the, assessee is not liable to pay income-tax he cannot be subjected to pay super tax and the same having been paid by the firm he is entitled to refund to the extent of his proportionate share. It was observed by the Hon'ble Supreme Court that the claim of refund of super tax has been based mainly on the interpretation, of proviso (ii) of Part-I of the Third Schedule to the Income-tax Act, 1922. The proviso fixed the maximum ceiling for assessing income tax and the method for calculating such ceiling has also been given. The Hon'ble Supreme Court then considered the method provided for determing the maximum-ceiling for assessing income tax and after considering the reasons assigned by the Tribunal for direction to allow refund held as follows:---

"In our view, the proviso provides maximum limit of the liability of a tax payer by providing that his total liability of income tax which will include super tax shall not exceed 75 % . It does not provide that an assessee will be entitled to the refund of the super tax in case overall he suffers loss in a particular assessment year."

For calculating the income tax payable by the assessee proviso(ii) takes into account the super tax paid by the firm and as the amount of super tax representing assessee's share is excluded from the income tax payable on the total income to bring about the net income tax chargeable as illustrated above, the question of refund of super tax does not arise as the same has been deducted from the income tax payable by the assessee/partner. "

16. The Hon'ble Supreme Court of Pakistan ultimately held as

"Under section 55 a registered firm is charged to super tax. The learned counsel for the appellant contended that a partnership firm is not legal entity and, therefore, it is the partner who is in fact charged to tax. It is true that a firm is not a legal person or a juridical entity but for the purpose of income tax or super tax the firm is treated as an entity distinct from the persons who constitute the firm. Reference can be made to Watson & Everitt v. Blunden 18 TC 402(409) (CA). This judgment teas approved by House of Lords in City of London, Income-tax Commissioner v. Gibbs, 24 TC 221 (248). Reference can also be made to Arunachalam Chectien v. CIT, 1936 ITR 173(178) (PC). Like section 3 of the Income-tax Act which is a charging section for the purposes of tax, section 55 also, provides that the firm or the partners of the firm individually are charged to tax and are treated as assessable entities. Once a firm or individual is treated as assessable entity, the law relating to charge, assessment and recovery shall be applied to it/him. In pursuance of section 55, super tax is levied on a registered firm which has to pay it. Part-I of the Third Schedule merely provides the rates of. the income tax and the manner in which it should be calculated. he proviso is applied only to determine the amount of income tax to be levied. It will not apply to cases or to persons whose income is not assessed to income tax. It does not confer a right to claim refund of the same. The firm while being assessed to super tax is a distinct assessable unit and even if the partner due to loss .in other business suffers an overall loss, it will not reduce the liability of such firm from payment of super tax on its business in which it has earned profit and gains.

6. The contention of the learned counsel is that the appellant is entitled to refund under section 48 of the Act. Section 58 provides that all provisions of the Act relating to charge, assessment, collection and recovery of income tax except those specified therein shall apply to the charge, assessment, collection and recovery of the super tax. Therefore, the entire machinery provided for charging, assessment and collection with the exceptions mentioned in it are applied to the assessment proceedings of super tax. Section 48 is a part of the machinery of the charge, assessment and recovery of income tax and, thus, can be pressed in service for the purpose of claiming refund of the super tax. Section 48 is couched in general terms which provides that any individual company, local authority, firm of any partner of the firm may apply for refund of so much of the amount of the tax paid by him which exceeds the amount properly chargeable under the Act. This section refers to refund of the tax chargeable under the Act. Section 2(14) defines 'tax' and 'tax payable' under the Act and includes penalty, interest, fee and charges leviable under the Act. Super-tax is also charged under the Act, and, therefore, section 48 will be applicable for claiming refund. However, before any refund can be claimed the assessee has to satisfy the Income-tax Officer that the amount of tax paid by him or on his behalf exceeds the amount with which he is properly chargeable under the Act. This pre-condition should be satisfied before claiming a refund. In the present case, as discussed above, neither on the interpretation of section 16 or proviso (ii) to para. A of Part-I of the Third Schedule, the appellant is entitled to claim refund. Therefore, in the absence of entitlement to claim refund, section 48 cannot be pressed in service. We, therefore, dismiss the appeal. "

17. A perusal of the judgment of Hon'ble Sindh High Court and Hon'ble Supreme Court of Pakistan, leaves no scintilla of doubt in our mind that the ratio of the above judgment is that for the purpose of income-tax the firm and partner are different entities/persons. The super tax paid by the firm is not to be refunded in the hands of partners. We are of the opinion that after a very lucid exposition of law by the Hon'ble Supreme Court of Pakistan which admits of no ambiguity or confusion we need not to discuss or elaborate anything else.

18. For the foregoing reasons it is held that the super-tax paid by firm is not refundable in the hands of partners. After reproducing the relevant findings of Hon'ble High Court and Supreme Court of Pakistan we would like to examine the judgments of this Tribunal and the judgment of Hon'ble Sindh High Court in favour of assessee. The first judgment which has been produced before us is I.T.A. No.1129/KB of 1989-90, dated 19-11-1995. This is very short judgment in which neither the facts have been considered nor law has been discussed. The judgment is reproduced below:--

"These four appeals relating to assessment years 1981-82, 1983-84, 1984-85 and 1985-86 have been directed against the appellate order passed by the learned. CIT (Appeals-V), Karachi.

2. Mr. Anwar Goraya, the learned Departmental Representative and Mr. Minu Bamjed, the learned A.R. for the assessee are in attendance. Mr. Minu Batnjee drew our attention to judgment reported as (1985) 51-Tax-26 and submitted that in view of the judgment cited above, all the appeals relating to the assessment years 1981-82, 1983-84, 1984-85 and 1985-86 have become infructuous. The learned D.R. Mr. Anwar Goraya, who had earlier sought time to go through the judgment has conceded that the judgment is on all fours to the position taken up by Mr. Minu Bamjee, the learned A.R. for the assessee.

3. We are of the view that because of the judgment reported as 1985 PTD 401 all the appeals relating to the assessment years involved have become infructuous and are dismissed as such."

19. The second judgment is in I.T.As. Nos.388 to 390/KB of 1987-88, dated 8-4-1996. In this judgment also the reference has been made to the findings of Hon'ble Sindh High Court in the judgment reported as 1985 PTD 401 and the appeals have been allowed with the observation that, 'under the circumstances all these appeals are hereby allowed.' This judgment is also per incuriam as the relief has been allowed which is. diametrically opposite to findings of Hon'ble High Court The third judgment is in I.T.As. Nos.383 to 384/KB of 1989-90, dated 3-6-199? In. this case also reliance was placed on the judgment of Hon'ble Sindh High Court, reported as 1985 PTD 401. In this Judgment plea was taken that the ratio of Hon'ble High Court's judgment was applicable if there was overall loss and it is not applicable to the other cases. The D.R. conceded to the plea taken by the A.R. of the assessee and, therefore a direction was given to refund the super tax in excess of the tax liability of the partners. It is obvious that direction has been given in pursuance of the decision of the Hon'ble High Court but it is not in consonance with the ratio of judgment of Hon'ble High Court and. therefore, this judgment is also per incuriam. The fourth judgment is in I.T.A. No.391 to 393/KB of 1987-88. In this case, it was pleaded that the issue has been settled by other Division Benches of the Tribunal and, therefore, the order, dated 8-4-1996 in I.T.As. Nos.388 to 390/KIB of 1987-88 was followed.

20. The above discussion shows that all the judgments of this Tribunal cited by the A. R: of the assessee before us are per incuriam, they are not in consonance with the ratio of the judgment of the Hon'ble High Court and Hon'ble Supreme Court.

21. Now we take up the judgment of Hon'ble High Court in I.T.A. No.302 of 1997, dated. 3-3-1999. In this case the first question on which opinion of Hon'ble High Court was sought 4s as follows:---

"Whether on the facts arid in the circumstances of this case the learned Income-tax Appellate Tribunal was justified in allowing the appeal of the assessee regarding issuance of refund, out of super tax paid by the assessee in excess of 45 % of the income of the. assessee?"

22. The learned D.R. has rightly pointed out that the Advocate appearing for the department framed wrong question. From the reading of above question it appears as if refund was being claimed by the same assessee who paid the super-tax. Although the correct fact was that the super-tax was paid by the firm and, the refund was being claimed by the partner. It is established law that for the purpose of income-tax the firm and partners are separate persons and different assessee. The Hon'ble Supreme Court has already held so in the judgment reported as 1992 PTD 1632. The learned D.R. further submitted that the earlier judgment of Hon'ble High Court authored by Mr. Justice Ajmal Mian reported as 1985 PTD 401 was cited and it has been observed in the order, dated 3-3-1999 that the question was .considered in great detail in the judgment reported as 1985 PTD 401. The concluding para. of the above judgment was also reproduced. However, it appears that the case was represented before the Hon'ble High Court in entirely wrong perspective and due to misleading pleas taken before the Hon'ble High Court, the following finding has been given:---

"From the perusal of the order of the Tribunal, dated 21-6-1997 in I.T.As. Nos. 391/KB of 1987-88 to 393/KB of 1987-88, we find that the Tribunal has decided the question of refund of the amount out of the super tax paid by the respondent in 'excess of the maximum tax liability in accordance with proviso (e) to Paragraph A of part I of the First Schedule to the Income Tax Ordinance in accordance with the pronouncement made by this Court in the case of the Commissioner of Income Tax v. Soli M. Cowasjee, (supra). In the Circumstances, the first question is to be answered in the affirmative."

23. A perusal of the earlier discussion shows that the observation that, the order of Tribunal was in accordance with the pronouncement made by the Hon'ble High Court in the case of CIT v. Soli M. Cowasjee, is result of lack of assistance rather taking of-incorrect and misdirected pleas. The order of the Hon'ble High Court dated 3-3-1999 being per incuriam and in conflict with the earlier judgment of the Hon'ble High Court on which reliance has been placed and the judgment of Hon'ble Supreme Court of Pakistan reported as 1992 PTD 1632 (which was not cited before the Hon'ble High Court) is of no assistance to the respondent/assessee in these appeals.

24. Consequent to the above discussions it is held that the Hon'ble Sindh High Court in its judgment reported as 1985 PTD 401 and Hon'ble Supreme Court of Pakistan while confirming the said judgment reported as 1992 PTD 1632 have held that the super tax paid by the firm is not refundable in the hands of partners. All other judgments to the contrary are per curium and have no binding effect. It is further held that the Assessing Officer rightly disallowed the plea for refund to which no exception can be taken. A perusal of the assessment order shows that in all the cases under appeal no income tax has been charged from the respondents. The tax liability of the respondents has been calculated in accordance with the method approved by the Hon'ble Sindh High Court and by the Hon'ble Supreme Court of Pakistan in the judgments referred to in the earlier part of this order. The learned A.R. of the respondents has conceded to this factual position. It is further held that the learned CIT(A) was not justified in giving direction for refund of the super tax. At this juncture we would like to clarify that the fault does not lie with the learned CIT(A), in giving the impugned direction as. he placed reliance on the judgment of a provision Bench of this .Tribunal, dated 21-6-1997 which has been considered by us in this order.

The impugned direction of learned CIT (A) is hereby vacated and the treatment given by the Assessing Officer is hereby restored.

24-A. Before parting with this order we would like to observe that Mr. Anthony Samamaria submitted that there is calculation mistake in giving credit of the share of partners in the; firm. If there is any such mistake the respondents may submit rectification applications and if any relief other than refund is available to them in law they may seek the same by way of rectification application. The Assessing Officer shall not allow any refund but if any other plea is taken it shall be considered on merits according to law.

25. The appeals at the instance of department are allowed as above.

C.M.A./M.A.K./3/Tax(Trib.)Appeals allowed.