Tribunal partially allows appeals, remands issues for further consideration, upholds CIT(A)'s decisions.

The Tribunal partly allowed both the assessee's and the Revenue's appeals for statistical purposes. The Tribunal remanded specific issues to the AO for further consideration based on additional evidence or pending adjudications by the Excise Department. The Tribunal upheld the CIT(A)'s decisions on several grounds, finding no specific errors or reasons to interfere with the earlier findings.

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Issues Involved:
1. Eligibility for deduction under section 80IB for FDR interest and interest on staff loan.
2. Eligibility for deduction under section 80IB for the assessee's production commencement date.
3. Eligibility for deduction under section 80IB for exchange rate difference.
4. Eligibility for deduction under section 80IB for sundry balance written back.
5. Addition on account of under-valuation of scrap sales.

Detailed Analysis:

1. Eligibility for Deduction under Section 80IB for FDR Interest and Interest on Staff Loan:
The assessee's appeal contested the exclusion of FDR interest and interest on staff loan from eligible profits for claiming deduction under section 80IB. The assessee argued that the FDRs were kept for obtaining letters of credit and bank guarantees, thus having a direct nexus to business activities. The Tribunal noted that the issue had been raised in previous assessment years and decided in favor of the Revenue. However, new evidence was presented to prove the nexus of borrowed funds with FDRs. The Tribunal admitted the new evidence and restored the issue to the AO for re-evaluation. The appeal was allowed for statistical purposes.

2. Eligibility for Deduction under Section 80IB for the Assessee's Production Commencement Date:
The Revenue's appeal challenged the CIT(A)'s decision that the assessee was eligible for deduction under section 80IB, arguing that the assessee failed to commence production before the cut-off date of 31.03.2004. The CIT(A) had allowed the deduction based on findings from earlier years, which were upheld by the Tribunal. The Tribunal found no specific error in the CIT(A)'s findings and confirmed the order, rejecting the Revenue's grounds.

3. Eligibility for Deduction under Section 80IB for Exchange Rate Difference:
The Revenue contested the CIT(A)'s decision to allow deduction for exchange rate difference under section 80IB. The CIT(A) had directed the AO to include the foreign exchange difference for deduction computation, following the Bombay High Court's decision in CIT Vs. Rachna Udyog. The Tribunal upheld the CIT(A)'s decision, noting that the Bombay High Court had considered the Supreme Court's judgment in Liberty India Vs. CIT. The Revenue's appeal on this ground was dismissed.

4. Eligibility for Deduction under Section 80IB for Sundry Balance Written Back:
The Revenue challenged the CIT(A)'s deletion of disallowance for sundry balance written back. The CIT(A) had allowed the deduction, stating that these amounts were treated as expenditure related to manufacturing activity in earlier years. The Tribunal found no reason to interfere with the CIT(A)'s order and confirmed it, rejecting the Revenue's ground.

5. Addition on Account of Under-Valuation of Scrap Sales:
The Revenue's appeal included an addition based on a show cause notice issued by the Excise Department regarding under-valuation of scrap sales. The Tribunal noted that the AO had made the addition without collecting independent evidence. Following a similar case (ACIT Vs. Santro Tiles Ltd.), the Tribunal restored the issue to the AO, directing a fresh decision after the Central Excise Department's adjudication. This ground was allowed for statistical purposes.

Conclusion:
Both the assessee's and the Revenue's appeals were partly allowed for statistical purposes, with specific issues remanded to the AO for further consideration based on additional evidence or pending adjudications by the Excise Department. The Tribunal upheld the CIT(A)'s decisions on several grounds, finding no specific errors or reasons to interfere with the earlier findings.

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