The Addl Cit (Asstt) Sr-1, Baroda v. Muneshben R.Shastri L/h of late Radheyshyam Shastri, Baroda

ITA 1752/AHD/2001 | 1997-1998
Pronouncement Date: 11-08-2010 | Result: Dismissed

Appeal Details

RSA Number 175220514 RSA 2001
Bench Ahmedabad
Appeal Number ITA 1752/AHD/2001
Duration Of Justice 9 year(s) 11 day(s)
Appellant The Addl Cit (Asstt) Sr-1, Baroda
Respondent Muneshben R.Shastri L/h of late Radheyshyam Shastri, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 11-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 11-08-2010
Date Of Final Hearing 11-08-2010
Next Hearing Date 11-08-2010
Assessment Year 1997-1998
Appeal Filed On 31-07-2001
Judgment Text
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