Kaushal M.Khanna, Surat v. The Dy.CIT.,Cent.Circle-2,, Surat

ITA 2883/AHD/2009 | 2005-2006
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 288320514 RSA 2009
Assessee PAN ADTPK8861B
Bench Ahmedabad
Appeal Number ITA 2883/AHD/2009
Duration Of Justice 6 month(s) 14 day(s)
Appellant Kaushal M.Khanna, Surat
Respondent The Dy.CIT.,Cent.Circle-2,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-04-2010
Assessment Year 2005-2006
Appeal Filed On 16-10-2009
Judgment Text
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` IS PARTLY ALLOWED. SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 30/4/2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 30/4/2010 26 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD