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Mitsui O.S.K. Lines Ltd. has been ordered to pay 480 million yen in taxes and penalties for failing to declare more than 800 million yen in taxable expense accounts, industry sources said Tuesday.

The Tokyo Regional Taxation Bureau determined that money declared by the shipping company to be transport fees paid to shipping companies Nippon Yusen K.K. and Kawasaki Kisen Kaisha Ltd. was actually a taxable social expense, the sources said.

According to the sources, Mitsui O.S.K. had a contract with an Australian trading house to transport Japanese cars to Australia for four years until fiscal 1996. Mitsui also asked the two Japanese firms to reserve space for the vehicles — in case Mitsui’s ships were unable to handle all the cargo — and paid them more than 400 million yen over the four-year period.

Mitsui also identified over 400 million yen on its books as money it owed the two shipping firms, according to the sources. The tax bureau, however, determined that the 800 million yen was for corporate social expenses.

Since the three firms had not signed any contracts or agreements regarding the number of cars to be carried by Nippon Yusen and Kawasaki Kisen, the payment appeared to be compensation from Mitsui O.S.K. to retain a large portion of the two firms’ market share, the sources said.

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