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84. Deduction of royalty on patents
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84. Deduction of royalty on patents.—(1) A person, being resident individual and a patentee, shall be allowed a deduction of an amount specified in sub-section (3) in respect of any income referred to in sub-section (2), if such income is included in his "gross total income from ordinary sources".
(2) The income referred to in sub-section (1) shall be any income received by the person by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970 (39 of 1970).
(3) The amount of deduction under sub-section (1) shall be the amount of income referred to in sub-section (2) to the extent it does not exceed the amount of royalty allowable under the terms and conditions of a licence settled by the Controller under the Patents Act, 1970 (39 of 1970), if a compulsory licence is granted in respect of any patent under that Actor three lakh rupees, whichever is lower.
(4) In of this section,—
(a) "patent" means a patent (including a patent of addition) granted under the Patents Act, 1970 (39 of 1970) ;
(b) "patentee" means the person, being the true and first inventor of the invention, whose name is entered on the patent register as the patentee, in accordance with the Patents Act, 1970 (39 of 1970), and includes every such person, being the true and first inventor of the invention, where more than one person is registered as patentee under that Act in respect of that patent ;
(c) "patent of addition" shall have the same meaning as assigned to it in clause (q) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970) ;
(d) "patented article" and "patented process" shall have the meanings respectively assigned to them in clause (o) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970) ;
(e) "royalty", in respect of a patent, means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains" or consideration for sale of product manufactured with the use of patented process or of the patented article for commercial use) for—
(i) the transfer of all or any rights (including the granting of a licence) in respect of a patent ; or
(ii) the imparting of any information concerning the working of, or the use of, a patent ; or
(iii) the use of any patent ;
(f) "true and first inventor" shall have the same meaning as assigned to it in clause (y) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970).
Clause 84 seeks to provide a deduction to a resident individual, who is a patentee, in respect of income earned by him by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970, if such income is included in his gross total income from ordinary sources.
The said clause further provides that the deduction under this clause shall be equal to the amount of royalty allowable under the terms and conditions of a licence settled by the Controller under the Patents Act, 1970, if a compulsory licence is granted in respect of any patent under that Act or three lakh rupees, whichever is lower.
The terms like, "patent", "patentee", "royalty", etc., have also been defined in the said clause.
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