Manufacturing expenses

[Deepak Khot]

Sir, can a learned AO consider manufacturing expenses should increase in proportionate with sales increase compare to previous years.

[Ganeshan Kalyani]

Sir logically questions raised by the AO which need to be answered logically. Thanks.

AI Summary

Assessment of manufacturing expenses requires logical justification for proportional increases tied to sales during tax scrutiny. Assessment of manufacturing expenses focuses on whether reported production costs may be adjusted by the assessing officer on the basis that such expenses should vary proportionately with changes in sales, and that any assertion of disproportionate expense growth requires logical justification supported by explanation and records.