The DCIT, Central Circle-2(2),, Ahmedabad v. M/s. Mahipat Raichand Sharebroking Pvt. Ltd.,, Ahmedabad

ITA 1044/AHD/2009 | 2001-2002
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 104420514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 1044/AHD/2009
Duration Of Justice 2 year(s) 3 month(s) 15 day(s)
Appellant The DCIT, Central Circle-2(2),, Ahmedabad
Respondent M/s. Mahipat Raichand Sharebroking Pvt. Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 22-07-2011
Date Of Final Hearing 11-07-2011
Next Hearing Date 11-07-2011
Assessment Year 2001-2002
Appeal Filed On 06-04-2009
Judgment Text
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