Section 152 — Deduction in respect of royalty on patents

(1) An assessee, being an individual, who is—
( a) resident in India;
( b) a patentee;
( c) in receipt of income by way of royalty in respect of a patent registered
on or after the 1st April, 2003 under the Patents Act, 1970 (39 of 1970);
and
( d) having gross total income for the tax year which includes royalty,
shall be allowed a deduction from such income computed in the manner specified
in sub-sections (2) to (7).
(2) The deduction under this section shall be equal to the whole of such income
referred to in sub-section (1) or ` 300000, whichever is less.
(3) Where a compulsory licence is granted in respect of any patent under the Patents
Act, 1970 (39 of 1970), the income by way of royalty for the purpose of allowing
deduction under this section shall not exceed the amount of royalty under the terms
and conditions of a licence settled by the Controller under that Act.
(4) In respect of any income earned from any source outside India, so much of the
income, shall be taken into account for the purpose of this section as is brought
into India by, or on behalf of, the assessee in convertible foreign exchange within
six months from the end of the tax year in which such income is earned or within
such further period as the competent authority referred to in section 151(8)(c)may
allow in this behalf.
(5) No deduction under this section shall be allowed unless the assessee furnishes a
certificate in the prescribed form, duly signed by the authority as may be prescribed,
along with the return of income setting forth such particulars as may be prescribed.
(6) No deduction under this section shall be allowed in respect of any income
earned from any source outside India, unless the assessee furnishes a certificate in
such form, from the authority or authorities, as may be prescribed, along with the
return of income.
(7) Where a deduction for any tax year has been claimed and allowed in respect of
any income referred to in this section, no deduction in respect of such income shall
be allowed under any other provision of this Act in any tax year.
(8) For the purposes of this section,—
( a) “Controller” means the authority as defined in section 2(1)( b) of the
Patents Act, 1970 (39 of 1970);
( b) “lump sum” includes a non-returnable advance payment for royalties;
( c) “patent” means any patent granted, including a patent of addition, under
the Patents Act, 1970 (39 of 1970);
( d) “patentee” means the true and first inventor recorded as the patentee
under the Patents Act, 1970 (39 of 1970), including joint patentees
recorded as such true and first inventors;
( e) “patent of addition” shall have the same meaning as assigned to it in
section 2(1)(q) of the Patents Act, 1970 (39 of 1970);
( f) “patented article” and “patented process” shall have the same meanings
as assigned to them in section 2(1)( o) of the Patents Act, 1970 (39 of
1970);
( g) “royalty” in respect of a patent, means consideration 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; or
( iv) the rendering of any services in connection with the activities
referred to in sub-clauses ( i) to ( iii), but does not include any
consideration,—
( A) which would be the income of the recipient chargeable under
the head “Capital gains”; or
( B) for sale of product manufactured with the use of patented
process or of the patented article for commercial use;
( h) “true and first inventor” shall have the same meaning as assigned to it
in section 2(1)(y) of the Patents Act, 1970 (39 of 1970).
D.—Deductions in respect of other incomes