Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 0674 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-06-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2003-2004
Appeal Filed On
17-11-2008
Judgement Text
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
