At issue were the company's transactions involving auto parts with overseas units in the six years to March 2007.

Following its audit of the transactions based on the transfer pricing taxation system, the Nagoya Regional Taxation Bureau concluded that the company underreported income by 15.5 billion yen in the period, according to Denso, an affiliate of leading Japanese automaker Toyota Motor Corp. <7203>.

The tax bureau claims that Denso set the prices of the auto parts sold to the overseas units at low levels and transferred profits to them as a result, Denso said.

Denso said that it will file an objection with the tax bureau while seeking consultations with tax authorities of relevant overseas countries to obtain relief from double taxation pursuant to provisions under the bilateral tax treaties between Japan and those countries, the company said.