Month: July 2020

Bangalore University B.com Notes

Expenses Expressly Disallowed

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Expenditures disallowed for TDS default

The Income Tax Act states certain circumstances where if the TDS deductible on payments has not been deducted appropriately, such expenses are expressly disallowed.

The various provisions which relate to disallowance on account of TDS default are as follows:

  • Payment (for other than salaries) outside India or to a non-resident or foreign company (for example payments for interest, royalty, technical fee, etc.)

The repercussions under various scenarios of TDS default are given below:

Nature of default Expenditure deductible in current year Expenditure deductible in any previous year
Tax is deductible but not deducted 100% of such expenditure is disallowed If deducted in the subsequent year, expenditure is allowed in the year in which tax is deducted and deposited
Tax is deducted but not deposited before the due date or date of I.T. return 100% of such expenditure is disallowed If deposited after due date or date of IT return, expenditure is allowed in the year in which tax is deposited

If any amount is paid as salaries to a person outside India or a non-resident without deduction of TDS, the amount so paid is disallowed as expenditure.

  • Payment of any sum to a resident with TDS default (including salaries)
  • The repercussions under various scenarios of TDS default are given below:
Nature of default Expenditure deductible in current year Expenditure deductible in any previous year
Tax is deductible but not deducted 30% of such expenditure is disallowed If deducted in the subsequent year, expenditure is allowed in the year in which tax is deducted and deposited
Tax is deducted but not deposited before the due date or date of I.T. return 30% of such expenditure is disallowed If deposited after due date or date of IT return, expenditure is allowed in the year in which tax is deposited

The act also provides for a relief in case of non-deduction of TDS if the below-mentioned clauses are fulfilled.

In a case where TDS is required to be deducted and the same has not been deducted, the assessee can claim a relief and the expenditures will be allowed if:

  • The recipient has filed his return of income in time;
  • The above payment has been taken into account by the recipient while filing his/her return;
  • The recipient has paid taxes appropriately on the declared income;
  • A certificate from a Chartered Accountant is obtained and uploaded with the return to this effect.

Expenditures disallowed for Equalization Levy default

In cases where for any particular expenditure (where the equalization levy is required to be deducted) there is a default on account of equalization levy through either of the following channels, the amount of such expenditure is disallowed.

  • Non-deduction of equalization levy
  • Non-deposit of equalization levy before due-date or filing of IT return

Although, in the subsequent year when the deduction or deposit is so made, the expenditure is thus allowed.

Expenditures disallowed for payment in cash

There are certain transactions where the payment for the services or goods are made by the assesses in cash instead of cheque or bank transfer, etc. In all such cases where the amount of payment exceeds Rs. 20,000, the expenditure is disallowed. The act provides for such payments to be made through an account payee cheque, account payee bank draft or bank transfer and likewise.

Although the section provides for disallowance in case of payments for expenditure in cash beyond Rs. 20,000, there are certain instances where the payment exceeding Rs. 20,000 is allowed in cash and the allowance for such expenditures are given as well. Such list of expenditures is prescribed in Rule 6DD.

An illustrative list is given here as follows:

  • Payment to banks, financial institutions, etc.
  • Payment to government
  • Payment made by book adjustments
  • Payment for purchase of agricultural products
  • Payment made to cottage industries which are producing without the aid of power
  • Payment to a person in a village which is not served by any banks
  • Payment of employment terminal benefits (Up to Rs. 50,000)
  • Payment of salary after deducting TDS appropriately
  • Payment made on a day on which banks are closed
  • Payment made by forex dealer

The provision applies in the case where the payment is made to a single person in a single day.

Recently, the income tax department has notified that the limit of all expenses made in cash on a particular day has been reduced to Rs 10,000. The rules provides for such payments made through an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA and will have effect from the 1st of September 2019.

Here is the list of other electronic modes specified in Rule 6BBA:

  • Credit/debit card
  • Net banking
  • IMPS
  • UPI
  • RTGS
  • NEFT
  • BHIM Aadhaar pay
Bangalore University B.com Notes

Expenses Allowed on Payment Basis

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Section 43B is an over-ruling section and anything contained in other provisions of the Income Tax Act should not be applicable to the payments mentioned under this section.

Section 43B states that certain payments should be allowed to be claimed as an expense only in the year in which they have been paid and not in the year in which the liability to pay such sum was incurred. Thus, for the following expenses, accrual concept of accounting should not be followed and only cash basis of accounting should be followed.

However, the provisions of Section 43B shall not apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing his Income Tax Return under Section 139(1) in respect of the previous year in which liability to pay such sum was incurred by the assessee and the evidence of such payment is furnished along with the income tax return.

Payment of Taxes

Any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called under any law for the time being in force, or

Employer Contribution for benefit of Employee

Any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity find or any other fund for the welfare of the employees

Bonus/ Commission

Any Bonus or Commission payable to the Employees

Interest on any Loan or Borrowing

Any sum payable by the assessee as Interest on any Loan or borrowing from any public financial institution or a State Financial Corporation or a State Industrial Investment Corporation, in accordance with the terms and conditions of the agreement governing such loans of borrowings, or

Interest on any Loan or Advance

Any sum payable by the assessee as Interest on any Loan or Advance from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advance

Provision for Leave Encashment

Any sum payable by the assessee as an employer in lieu of any leave to the credit of his employee

Payment made to Railways

With a view to promote prompt payment to Railways, Budget 2016 has amended Section 43B and from Financial Year 2016-17 onwards, the payments made to Railways would be allowed to be claimed as an expense on Payment basis.

Other Relevant Points

For the removal of any doubts, it has been clarified that a deduction of any sum being interest payable under Clause (d) or Clause (e) of this Section, shall be allowed if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan .or borrowing shall not be deemed to have been actually paid.

As per Section 43B

Notwithstanding anything contained in any other provision of this Act*, a deduction Sudame otherwise allowable under this Act in respect of:

a) Any sum payable by the assessee by way of tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);

b) Any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;

c) Any sum payable as bonus or commission to employee for services rendered;

d) Any sum payable by the assessee as interest on any loan or borrowing from any public finan­cial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing;

e) Any sum payable by the assessee as interest on any loan or advances from a scheduled bank or (wef A.y 2018-19 from a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank) in accordance with the terms and conditions of the agreement governing such loan or advanc­es;

f) Any sum payable by the assessee as an employer in lieu of any leave at the credit of his em­ployee.

g) Any sum payable to Indian Railways for the use of railway Assets (wef A.y 2017-18)-Section 43B to include certain payments made to Railways

Bangalore University B.com Notes

Problems on Business relating to Sole Trader

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A sole proprietor business is established, owned, financed and controlled by a single person who is known as sole trader or sole proprietor.

Such a business run by sole trader or sole proprietor is known as sole trade or sole proprietorship.

Advantages of Sole Proprietorship:

Sole proprietorship offers the following pros:

  • Easy to Form:

Proprietary concerns can be formed easily and quickly. Very few legal formalities need to be fulfilled. There is no need to go for any registration or enter into an agreement with someone. One can form it and dissolve it quickly.

  • Effort-Reward Relationship:

Proprietary ventures give a kick in the belly. You can burn the candle of energies and make money. You take the risk and get rewarded. The effort-reward relationship often excites people to chase creative ideas and turn them into successful ventures.

  • Full Control:

The owner has full control over everything. He is answer­able to no one else. He decides everything in the best interests of the business. Right or wrong, he takes charge of the situation.

  • Quick Decisions:

Proprietors can put things in order quickly if something goes wrong. If opportunities come his way, he can exploit them readily. He can give a fat discount to a loyal customer on the spot if he feels that such a step brings in additional revenues in future. Small businesses are known for their quick and effective decisions.

  • Economical and Efficient Operations:

The owner can put resources to best use. He can take steps to eliminate wastages of all kinds. He can control the cost of running the show.

  • Personal Touch:

The owner can bring his skills, knowledge and exper­tise to the table. He can play with his ideas and get them going. He can convert his dreams into concrete realities. He can make things happen. He can use his brilliance to good advantage.

  • Keep the Business Simple, Dynamic and Flexible:

The owner can cut everything according to the cloth available. If there is demand, he can increase the scale and reach. If the demand is sluggish he can limit or­ders, reduce stocks and take measures to save every penny. He can run the show in sync with changing customers’ tastes and preferences.

  • Keep the Secrets Close to Heart:

The proprietor need not share business secrets with any one. He need not place all his cards on the table at any point of time.

  • Society Gains as a Whole:

Small ventures benefit society a lot. Ownership is diffused. If the venture turns successful, it generates employment. Customers get what they want in nearby places.

Disadvantages of Sole Proprietorship:

Sole proprietorship suffers from the following drawbacks or cons:

  • Small Size:

By its very nature, proprietary concerns cannot grow big. They have limited means. They cannot expand operations in a big way. As a result, they do not enjoy the economies of scale. Customers, in the final analysis, do not gain from such miniscule concerns in the long run.

  • Limited Shelf Life:

You never know when a big Mall will come nearby and kill all small players. Small businesses have limited life spans. They exist for a while and disappear within no time if customers turn into mall rats (shopping always from big malls).

  • Lacks Professional Skills and Talent:

The proprietor lacks professional skills, talent and expertise. He has limited knowledge and does not have the ability to gauze competition, changes in fashions and customer tastes and preferences, trends in economy etc. He cannot run the show in a professional way.

  • See the Big Picture:

His overall knowledge of market, competition, prod­ucts, tastes of customers, changes in fashions and trends, general trends in economy, danger from global firms etc.—is relatively poor. As a result he might take inappropriate decisions in a hurry, looking at things from a narrow perspective.

  • Unlimited Liability:

If the small business owner fails, he has to swallow all losses. The liabilities of a firm might eat away the accumulated wealth of the owner almost instantaneously. The risk of unlimited liability forces many a sole proprietor not to expand operations beyond a point.

  • Growth Prospects:

Business cannot go beyond a point for a variety of reasons—limited capital, owner lacks needed skills and competencies required to run the show on a large scale, unlimited liability compels many owners to remain small etc. The proprietary concern, therefore, does not grow to an optimum level and enjoy the economies of scale.

Bangalore University B.com Notes

Problems on Profession relating to Chartered Accountant, Advocate and Medical Practitioner

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Chartered Accountancy

Chartered accountancy is a profession which works closely with the core of all business whether it is small, medium or big size firm. A professional chartered accountant typically involves in accounting, auditing, tax, and financial planning. This job is highly rewarding and is also considered very challenging. Career opportunities post chartered accountancy are full of excitement.

There are various professional challenges that a person can face while working as a CA. You can see these challenges below:

Have to Work Overtime

During the fiscal year, there come several times when a chartered accountant has to work more than 70 hours a week.

Competitive Job

CA job is very competitive, People who are in this professionals are naturally driven, determined, focused and more intelligent as compared to other jobs. The training and job in this profession are highly competitive and intense.

Handle Pressure Situations

CA job has very responsible tasks and activities, as you have to make sure that each and every detail is up to the mark and when are doing overtime and having strict deadlines, it becomes very difficult to keep your focus.

Never Ending Training

Working in this field always require continuing professional development, so availing training in this profession is a continuous process. So you will have to keep studying throughout your career.

Detail Oriented Job

This job is meant for those professionals who are naturally highly detail-focused for any task.

Hierarchical Career

CA profession is a hierarchical career, here you will have to follow some sets of defined protocols and steps to move in the career hierarchy.

Deadlines in this career are non-negotiable and it is very important to meet the deadlines. So if you like to keep pushing things up to the last second then you are not in the right profession.

Advocate

A lawyer’s profession is meant to be a divine or sacred profession by all means. In every profession, there are certain professional ethics that need to be followed by every person who is into such a profession. But there is the fact that professional misconduct is a common aspect, not only in other professions but also in advocacy also. In simple terms, it means certain acts done by the persons which seem to be unfit for the profession as well as which are against certain ethics in this field. The term has been clearly defined in Black’s Dictionary as, the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful behavior, improper or wrong behavior. Its synonyms are a misdemeanour, impropriety, mismanagement, offense, but not negligence or carelessness. From the definition, it is now clear that the act of professional misconduct is done purely with an intention of getting unlawful gains. The Advocates Act, 1961 and the Indian Bar Council play a vital role in providing rules and guidelines regarding the working, code of conduct and such other matters concerning lawyers and advocates in India.

The attributes of a profession are:

  1. Existence of a body of specialized knowledge or techniques.
  2. Formalized method of acquiring training and experience.
  3. Establishment of a representative organization with professionalism as its goal.
  4. Formation of ethical codes for the guidance of conduct.
  5. Charging of fees based on services but with due regards to the priority of service over the desire of monetary rewards.

Misconduct means any acts which are unlawful in nature even though they are not inherently wrongful. Before the Advocates Act, 1961, we had the Legal Practitioners Act, 1879. There is no definition given for the term ‘misconduct’ in the Act, but the term ‘unprofessional conduct’ is being used in the Act. Some of the instances of professional misconduct are as follows:

  • Dereliction of duty
  • Professional negligence
  • Misappropriation
  • Changing sides
  • Contempt of court and improper behaviour before a Magistrate
  • Furnishing false information
  • Giving improper advice
  • Misleading the clients in court
  • Not speaking the truth
  • Disowning allegiance to the court
  • Moving application without informing that a similar application has been rejected by another authority
  • Suggesting to bribe the court officials
  • Forcing the prosecution witness not to say the truth.

Advocates Act, 1961

The provisions of Section 35 of the Advocates Act deal with professional misconduct of lawyers and advocates in India, which read as:

A person is found guilty of professional misconduct; it shall refer the case to a disciplinary committee, shall fix a date of hearing and issue a show cause notice to the Advocate and the Advocate General of the State. The disciplinary committee of the State Bar Council, after being heard of both the parties, may:

  1. Dismiss the complaint, or where the proceedings were initiated at the instance of the State Bar Council, directs that proceedings be filed;
  2. Reprimand the advocate;
  3. Suspend the advocate from practice for such a period as it deems fit;
  4. Remove the name of an advocate from the state roll of advocates.

Misconduct is of infinite variety; this expression must be understood in a broad meaning, such that it extends the meaning under natural law, and there is no justification for restricting their natural meaning. Section 49 of the Advocate Act empowers the Bar Council of India to frame rules and standards of professional misconduct. Under the Act, no person has a right to make advertisement or soliciting; it is against advocate’s code of ethics. He is also not entitled to any advertisement through circulars, personal communications or interviews, he is not entitled to demand fees for training and to use name/service for unauthorized purposes.

Contempt of Court as Professional misconduct

Contempt of court may be defined as an offense of being disobedient or disrespectful towards the court or its officers in the form of certain behaviour that defies authority, justice, and dignity of the court. In various cases involving contempt of court, the court held that if any advocate or legal practitioner is found guilty of the act of contempt of court, he/she may be imprisoned for six years and may be suspended from practicing as an advocate  (In re Vinay Chandra Mishra). The court also held that license of the advocate to practice a legal profession might be canceled by the Supreme Court or High Court in the exercise of the contempt jurisdiction.

There are many other landmark judgments regarding the cases involving professional misconduct of the advocates. In the case of V.C. Rangadurai v. D.Gopalan, the court looked into the matter of professional misconduct in such a way that the decision was made in a humanitarian manner, considering the future of the accused in this case. The court held that “even so justice has a correctional edge, a socially useful function, especially if the delinquent is too old to be pardoned and too young to be disbarred. Therefore, a curative, not cruel punishment has to be delivered in the social setting of the legal profession”. The court then gave the decision in such a way that it looked at each and every aspect concerning the case as well as the parties concerned. It adopted a deterrent was of justice mechanism so that the accused person is awarded certain punishments but also provided a warning towards such other people who intend to commit acts of a similar nature. The judgment turned out to be a landmark in cases concerning professional misconduct as it delivered an effective judgment and but did not jeopardize the future of the accused person. In various other cases like J.S. Jadhav v. Musthafa Haji Muhammed Yusuf, the court delivered the decision in such a way that it created a notion in the minds of the wrongdoers that offenders will be punished accordingly.

Management Notes

Environment Protection Act 1986 Introduction, Objectives of the Act, Definitions of Important Terms Environment, Environment Pollutant, Environment Pollution, Hazardous Substance and Occupier

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Environment Protection Act, 1986, is a comprehensive legislation enacted by the Parliament of India with the primary aim of providing for the protection and improvement of the environment. It was introduced in the wake of the Bhopal Gas Tragedy in 1985, highlighting the need for a regulatory framework to address environmental issues. The Act serves as an umbrella legislation designed to provide a framework for coordinating, supervising, and enforcing environmental protection standards.

Introduction:

The Act empowers the central government to take measures necessary to protect and improve the quality of the environment by setting standards for emissions and discharges of pollution in the atmosphere by any person carrying on an industry, operation, or process. Additionally, it lays down guidelines for the State governments and other authorities to direct their activities towards environmental protection.

Objectives of the Act:

  • To Protect and Improve Environmental Quality

The Act aims to prevent, control, and abate environmental pollution to ensure a healthy environment for all citizens.

  • Regulation of Environmental Pollutants

It seeks to regulate the discharge of environmental pollutants and the handling of hazardous substances.

  • Comprehensive Environmental Protection

The Act endeavors to take appropriate measures for understanding and mitigating environmental pollution in its entirety, not just specific aspects or factors.

  • Legal Framework for Environmental Protection

It provides a legal framework for planning and executing a nationwide program for the prevention, control, and abatement of environmental pollution.

Definitions of Important Terms:

  • Environment

The term Environment encompasses all living and non-living elements that interact with each other. This includes natural components like air, water, soil, flora, fauna, and man-made structures such as buildings, roads, and industries. As per the Environment (Protection) Act, 1986, it refers to water, air, land, and the inter-relationship among them and with human beings, other living creatures, plants, and property. A healthy environment supports life systems and ecological balance. The quality of the environment determines the sustainability of development, public health, and biodiversity. Preserving environmental integrity is essential for future generations and responsible governance.

  • Enmental Pollutant

An Environmental Pollutant is any solid, liquid, or gaseous substance present in such concentration that it may cause harm to the environment. These substances can degrade air, water, or land quality and pose risks to human, animal, or plant life. Pollutants include chemicals, smoke, sewage, industrial waste, and toxic emissions. Under the Environment (Protection) Act, 1986, pollutants are those substances whose presence in the environment exceeds permissible limits. These may arise from industrial processes, vehicular emissions, or even household activities. Controlling pollutants is essential to maintain environmental quality and to safeguard ecological and public health.

  • Environmental Pollution

Environmental Pollution refers to the contamination of natural resources by harmful substances, rendering them unsafe for use or causing damage to the ecosystem. It affects air, water, and soil quality, and results in adverse health, economic, and ecological consequences. According to the Environment (Protection) Act, 1986, pollution is the presence of any environmental pollutant that leads to environmental degradation. Pollution can be caused by industrial discharge, vehicular emissions, improper waste disposal, deforestation, and urbanization. It disrupts ecological balance and requires regulation and mitigation through laws, policies, and active community participation to ensure sustainable development.

  • Hazardous Substance

A Hazardous Substance is any material, whether chemical or biological, that poses a significant risk to health, safety, or the environment due to its toxic, reactive, flammable, or corrosive properties. Under the Environment (Protection) Act, 1986, it is defined as any substance or preparation which can cause harm to humans, living organisms, or property due to its chemical or physico-chemical characteristics. Examples include industrial chemicals, pesticides, biomedical waste, and radioactive materials. The handling, transport, and disposal of hazardous substances are strictly regulated to prevent accidents, contamination, and long-term environmental damage.

  • Occupier

An Occupier refers to a person who has control over the affairs of a factory, premise, or operation and is responsible for ensuring compliance with environmental laws. As per the Environment (Protection) Act, 1986, an occupier includes any person who has control over a factory or premises and includes, in relation to any substance, the person in possession of the substance. The occupier is legally obligated to manage environmental risks, ensure safe handling of hazardous materials, maintain records, and report environmental incidents. The role of the occupier is central to environmental accountability and legal compliance in industries and institutions.nviro

Management Notes

Types of pollution in Environment protection act 1986

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Environment Protection Act, 1986, does not explicitly categorize pollution types within its text. However, it empowers the central government to take all necessary measures to prevent and control pollution and to establish quality standards for the environment, which implicitly covers various types of pollution. Based on the provisions of the Act and the general understanding of environmental pollution, the following types of pollution can be addressed under its framework:

Types:

  1. Air Pollution

This refers to the contamination of the atmospheric air due to the presence of harmful substances, including gases (like SO2, NOx, CO2, CO), particulates, and biological molecules, which pose health risks to humans, animals, and plants, and damage the environment. The Act allows for the regulation of industrial emissions and vehicular exhaust to control air quality.

  1. Water Pollution

Water pollution occurs when harmful substances—chemicals, waste, or microorganisms—contaminate water bodies, affecting water quality and making it toxic to humans and the environment. The Act encompasses the control and prevention of discharge of pollutants into water bodies, setting standards for the discharge of effluents and the treatment of sewage and industrial waste.

  1. Soil Pollution

Soil or land pollution is the degradation of the Earth’s land surfaces, often caused by human activities and their misuse of land resources. It results from the disposal of solid and hazardous waste, agricultural chemicals, and industrial activities. The Act includes measures to manage waste, control the use of hazardous substances, and remediate contaminated sites.

  1. Noise Pollution

Noise pollution involves exposure to high levels of sound that may harm human health or comfort, wildlife, and the environment. While not explicitly mentioned, the Act’s provisions for controlling environmental pollution implicitly empower the government to take measures against noise pollution through various rules and regulations enacted under its authority.

  1. Hazardous Waste Pollution

This type of pollution concerns the management, handling, and disposal of hazardous wastes—wastes that are dangerous or potentially harmful to human health or the environment. The Act specifically addresses the handling and management of hazardous substances and includes provisions for the safe disposal of hazardous waste to minimize its impact on the environment.

  1. Radioactive Pollution

Radioactive pollution results from the release of radioactive substances or radiations (like alpha, beta, gamma rays) into the environment, primarily from nuclear power plants, nuclear tests, and improper disposal of radioactive waste. The Act, through its provision on the control of hazardous substances, encompasses the regulation and management of radioactive waste and materials.

Consequences of Different Pollution:

Air Pollution:

  • Health Effects:

Air pollution is a leading environmental threat to human health. Exposure to polluted air can lead to respiratory infections, heart disease, stroke, lung cancer, and chronic respiratory diseases like asthma. Particulate matter, nitrogen dioxide, sulfur dioxide, and ozone are particularly harmful.

  • Environmental Damage:

Air pollutants can harm wildlife, damage forests, and affect bodies of water. Acid rain, resulting from sulfur dioxide and nitrogen oxides mixing with rainwater, can harm aquatic life in rivers and lakes, damage trees, and degrade the soil.

  • Climate Change:

Certain air pollutants, especially greenhouse gases like carbon dioxide and methane, contribute to global warming by trapping heat in the earth’s atmosphere. This leads to climate change, which can cause extreme weather conditions, rising sea levels, and disruption of natural ecosystems.

Water Pollution:

  • Health Risks:

Contaminated water can lead to various health problems, including diarrhea, cholera, dysentery, typhoid, and polio. Heavy metals and chemical pollutants can also cause long-term health issues, including cancer and neurological disorders.

  • Ecosystems Disruption:

Water pollution affects aquatic ecosystems, leading to the death of fish and other aquatic organisms, reducing biodiversity, and disrupting the balance of aquatic ecosystems. It can also lead to eutrophication, where excess nutrients cause an overgrowth of algae that depletes oxygen in the water, harming aquatic life.

  • Economic Impacts:

Polluted water affects agriculture by contaminating irrigation water, affects fisheries by reducing fish populations, and impacts tourism and recreation in polluted areas.

Soil Pollution:

  • Reduced Soil Fertility:

Contaminated soil can lose its fertility, reducing its productivity for agriculture and affecting food security.

  • Health Impacts via Food Chain:

Pollutants in the soil can enter the human body through the food chain, leading to health issues, including cancers, birth defects, and other illnesses.

  • Environmental Harm:

Soil pollution can lead to the loss of habitats, as contaminated areas become unsuitable for plants and wildlife. It also contributes to water pollution as pollutants leach into groundwater and surface water.

Noise Pollution:

  • Hearing Loss:

Prolonged exposure to high levels of noise can result in temporary or permanent hearing loss.

  • Psychological and Physical Stress:

Noise pollution can cause stress, anxiety, sleep disturbances, and high blood pressure, affecting overall well-being.

  • Wildlife Impact:

Excessive noise can disrupt the behavior and habitats of wildlife, affecting reproduction, communication, and feeding patterns.

Light Pollution:

  • Effects on Humans:

Light pollution can disrupt human circadian rhythms, affecting sleep quality and overall health.

  • Wildlife Disruption:

It can confuse animal navigation, alter competitive interactions, change predator-prey relations, and cause physiological harm.

Framework for Controlling Pollution under Environment Protection Act 1986:

  1. Empowerment of the Central Government
  • Regulatory Powers:

The Act grants the central government the authority to regulate industrial and other activities that could lead to environmental degradation. This includes the power to lay down standards for the quality of the environment in its various aspects (air, water, soil) and control the emission and discharge of pollutants.

  • Restriction on Hazardous Substances:

It allows the government to prohibit or restrict the handling of hazardous substances in certain areas to prevent environmental damage.

  1. Setting Standards
  • Emission and Discharge Standards:

The government, through the Ministry of Environment, Forest and Climate Change (MoEFCC) and other relevant authorities, is responsible for setting standards for the emission and discharge of pollutants into the environment. These standards are crucial for maintaining the quality of air and water.

  • Quality Standards for the Environment:

The Act also empowers the government to establish quality standards for soil, water, and air, which are essential for maintaining a healthy and balanced ecosystem.

  1. Prevention, Control, and Abatement of Environmental Pollution
  • Implementation of Measures:

The central government is tasked with implementing measures for the prevention, control, and abatement of environmental pollution. This includes creating policies, programs, and projects aimed at reducing pollution levels.

  • Environmental Impact Assessment:

The Act has led to the development of processes such as Environmental Impact Assessments (EIA), which evaluate the potential environmental impacts of proposed projects before they are approved.

  1. Role of Pollution Control Boards
  • Central and State Boards:

The Central Pollution Control Board (CPCB) and State Pollution Control Boards (SPCBs) play a significant role in the implementation of the Act. They are responsible for enforcing the standards set by the central government, monitoring pollution levels, and taking action against violators.

  • Monitoring and Compliance:

These boards monitor environmental quality, conduct inspections, and ensure compliance with the standards and regulations established under the Act.

  1. Legal Action Against Violators
  • Penalties:

The Act provides for penalties, including fines and imprisonment, for individuals or entities that violate its provisions or the standards set under it. This is intended to ensure adherence to environmental regulations and deter potential violators.

  • Legal Proceedings:

The government can initiate legal proceedings against those who fail to comply with the environmental standards, contributing to pollution.

  1. Public Participation and Access to Information
  • Involvement and Awareness:

The Act emphasizes the importance of public participation in environmental protection. It ensures access to information related to environmental quality, pollution, and the actions taken to address environmental issues.

  • Environmental Education and Awareness:

Efforts are made to educate the public about the importance of environmental protection and encourage community involvement in sustainability initiatives.

  1. Research and Development
  • Support and Promotion:

The Act supports and promotes research and development in the field of environmental protection. It encourages the development of new technologies and methods to reduce environmental pollution and improve environmental management.

Management Notes

Rules and Powers of Central Government to protect Environment in India

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The Environment Protection Act, 1986, vests the Central Government with substantial powers to take measures for protecting and improving environmental quality, and controlling and preventing pollution in India. These powers are critical to ensuring the sustainability and welfare of the environment and public health.

Legislation and Regulation

  • Power to make Rules:

The Central Government has the power to make rules to protect and improve the quality of the environment. This includes setting standards for emissions and discharges of pollutants into the environment, stipulating procedures and safeguards for handling hazardous substances, and laying down guidelines for the management of industrial and other wastes.

Standards for Environmental Quality

  • Setting Standards:

The government is empowered to establish standards for the quality of air, water, and soil for various areas and purposes. This is crucial for maintaining a healthy environment and for the prevention, control, and abatement of pollution.

Control of Pollution

  • Restrictions on Pollutants:

The Act gives the government the authority to restrict the industrial and other emissions and discharges of environmental pollutants. This includes the power to limit the production, handling, storage, and disposal of hazardous substances.

  • Prohibition and Closure:

The government can also prohibit or restrict certain industrial activities in specific areas and has the power to order the closure, prohibition, or regulation of any industry, operation, or process that violates the provisions of the Act.

Environmental Protection

  • Conservation Measures:

The government can take measures to conserve specific areas of environmental significance, protect the flora and fauna, and ensure the welfare of animals and plants.

  • Environmental Impact Assessment (EIA):

The government can mandate Environmental Impact Assessments for projects that are likely to have a significant impact on the environment. This helps in identifying potential environmental impacts and determining mitigation measures before project approval.

Research, Development, and Collaboration

  • Promotion of Research and Innovation:

The Central Government is tasked with supporting and promoting research, training, and information dissemination related to environmental protection. This includes fostering international cooperation in environmental research and technology development.

  • Collection and Dissemination of Information:

It has the power to collect and disseminate information regarding environmental pollution and its prevention and control.

Regulatory Enforcement

  • Inspection:

The government can appoint officers to inspect facilities and premises to ensure compliance with the Act. These officers have powers to enter, inspect, take samples, and examine documents.

  • Penalties and Legal Action:

It can impose penalties on individuals and industries that fail to comply with the environmental standards and regulations. This includes fines and imprisonment for violators.

Public Participation

  • Engagement and Awareness:

The government can facilitate public participation in environmental decision-making processes. This includes informing the public about environmental issues, conducting public hearings, and involving communities in conservation projects.

The powers granted to the Central Government under the Environment Protection Act, 1986, reflect a comprehensive approach towards environmental protection, emphasizing prevention, control, and abatement of pollution across various sectors. These powers are instrumental in ensuring that environmental concerns are integrated into developmental policies and practices, thereby promoting sustainable development.

Management Notes

WTO Patent Rules

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The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization (WTO). It sets down minimum standards for the regulation by national governments of many forms of intellectual property (IP) as applied to nationals of other WTO member nations. TRIPS was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) between 1989 and 1990 and is administered by the WTO.

The TRIPS agreement introduced intellectual property law into the multilateral trading system for the first time and remains the most comprehensive multilateral agreement on intellectual property to date. In 2001, developing countries, concerned that developed countries were insisting on an overly narrow reading of TRIPS, initiated a round of talks that resulted in the Doha Declaration. The Doha declaration is a WTO statement that clarifies the scope of TRIPS, stating for example that TRIPS can and should be interpreted in light of the goal “to promote access to medicines for all.”

Specifically, TRIPS requires WTO members to provide copyright rights, covering authors and other copyright holders, as well as holders of related rights, namely performers, sound recording producers and broadcasting organisations; geographical indications; industrial designs; integrated circuit layout-designs; patents; new plant varieties; trademarks; trade names and undisclosed or confidential information. TRIPS also specifies enforcement procedures, remedies, and dispute resolution procedures. Protection and enforcement of all intellectual property rights shall meet the objectives to contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.

Requirements

TRIPS requires member states to provide strong protection for intellectual property rights. For example, under TRIPS:

  • Copyright terms must extend at least 50 years, unless based on the life of the author. (Art. 12 and 14)
  • Copyright must be granted automatically, and not based upon any “formality”, such as registrations, as specified in the Berne Convention. (Art. 9)
  • Computer programs must be regarded as “literary works” under copyright law and receive the same terms of protection.
  • National exceptions to copyright (such as “fair use” in the United States) are constrained by the Berne three-step test
  • Patents must be granted for “inventions” in all “fields of technology” provided they meet all other patentability requirements (although exceptions for certain public interests are allowed (Art. 27.2 and 27.3) and must be enforceable for at least 20 years (Art 33).
  • Exceptions to exclusive rights must be limited, provided that a normal exploitation of the work (Art. 13) and normal exploitation of the patent (Art 30) is not in conflict.
  • No unreasonable prejudice to the legitimate interests of the right holders of computer programs and patents is allowed.
  • Legitimate interests of third parties have to be taken into account by patent rights (Art 30).
  • In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPS signatories under the principle of national treatment (with certain limited exceptions, Art. 3 and 5). TRIPS also has a most favored nation clause.
  • The TRIPS Agreement incorporates by reference the provisions on copyright from the Berne Convention for the Protection of Literary and Artistic Works (Art 9), with the exception of moral rights. It also incorporated by reference the substantive provisions of the Paris Convention for the Protection of Industrial Property (Art 2.1). The TRIPS Agreement specifically mentions that software and databases are protected by copyright, subject to originality requirement (Art 10).

Article 10 of the Agreement stipulates: “1. Computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention (1971). 2. Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself.”

Post-TRIPS expansion

In addition to the baseline intellectual property standards created by the TRIPS agreement, many nations have engaged in bilateral agreements to adopt a higher standard of protection. These collection of standards, known as TRIPS+ or TRIPS-Plus, can take many forms. General objectives of these agreements include:

  • The creation of anti-circumvention laws to protect Digital Rights Management systems. This was achieved through the 1996 World Intellectual Property Organization Copyright Treaty (WIPO Treaty) and the WIPO Performances and Phonograms Treaty.
  • More stringent restrictions on compulsory licenses for patents.
  • More aggressive patent enforcement. This effort has been observed more broadly in proposals for WIPO and European Union rules on intellectual property enforcement. The 2001 EU Copyright Directive was to implement the 1996 WIPO Copyright Treaty.
  • The campaign for the creation of a WIPO Broadcasting Treaty that would give broadcasters (and possibly webcasters) exclusive rights over the copies of works they have distributed.
Management Notes

Restoration and surrender of lapsed patent

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The Patents Act provides certain safeguards for restoring a lapsed patent. Accordingly a patent that is ceased to have effect because of failure to pay the prescribed fees within the prescribed period under Section 53 of the Act or within such period, allowed under Section 142 of the Act.

The patentee of his legal representative, may, make an application in the prescribed manner for the restoration of the lapsed patent. In the case where the patent was held by two or more persons jointly then with the leave of the Controller one or more of them without joining others may submit the application for restoration within eighteen months from the date on which the patent is ceased to have effect. Though the renewal fees can be paid by any person, the application for the restoration of a lapsed patent, the application has to be made by the patentee or his legal representative.

If the patentee fails to pay the renewal fee within the prescribed period and also within the extendable period of six months by requesting extension of time, the patent ceases to have effect or lapses from the date of expiration. Patent lapsed, due to non-payment of renewal/maintenance fee can be restored within eighteen months from the date of lapse.

Within one year of an application for restoration of patent that lapsed should be made. If an overdue annuity is not paid within the extension period, the one year period for seeking restoration commences from the date of recordal.

Section 60 Indian Patent Act:

(1) Where a patent has ceased to have effect by reason of failure to pay any renewal fee within the prescribed period or within that period as extended under sub-section (3) of section 53, the patentee or his legal representative, and where the patent was held by two or more persons jointly, then, with the leave of the Controller, one or more of them without joining the others, may, within eighteen months from the date on which the patent ceased to have effect, make an application for the restoration of the patent.

(2) An application under this section shall contain a statement, verified in the prescribed manner, fully setting out the circumstances which led to the failure to pay the prescribed fee, and the Controller may require from the applicant such further evidence as he may think necessary

The Essential Requirements to Restore a Patent:

  1. Under Section 60 of the Patents Act 1970, an application for restoration of lapsed patent should be made by patentee or his legal representative.
  2. Prescribed fee on Form 15
  3. Proof to support that failure of the renewal/ maintenance was unintentional.

Although there is no additional fee for Patent of addition, but the patent holder or the patentee has to submit each form individually for each additional patent with that of the parent restoration application.

Effect of non-payment of renewal fees

To keep the patent in force for its prescribed term, an annual renewal fee is paid to the patent Office. If the same is not paid in the stipulated period then it lapses (ceased to have effect) and becomes a public property. The Act provides certain Safeguards for restoring a lapsed patent.

Accordingly, a patent which is to have effect by reason of Failure to pay the prescribed renewal fees within the prescribed period under Section 53 of the Act, the patentee or his legal representative may make an application in the prescribed manner, for the restoration of the lapsed patent. In case where the patent was held by two or more persons jointly, then, with the leave of the Controller, one or more of them, without joining others, may submit the application for restoration within eighteen months from the date on which the patent ceased to have effect ( Section 60(1)).

Procedure for Disposal of Application for Restoration

a) When the Controller is prima facie satisfied that the failure to pay renewal fee was unintentional and there had been no undue delay, the application for restoration will be published in the official journal.

b) If the Controller is satisfied that a prima facie case for restoration has not been made, the Controller may issue a notice to the applicant to that effect. Within one month from the date of notice, if the applicant makes a request to be heard on the matter, a hearing shall be given and the restoration application may be disposed. If no request for hearing is received within one month from the date of notice by the Controller, the application for restoration is refused. In case of rejection of the application for restoration, a speaking order shall be issued.

c) Any person interested may give Notice of Opposition, in the prescribed manner, to the application within two months of the date of Publication in the official journal on the grounds that the failure to pay the renewal fee was not unintentional or that there has been undue delay in the making of the application.

d) The Notice of Opposition shall include a statement setting out the nature of the opponent’s interest, the grounds of opposition, and the facts relied upon. The notice of opposition shall be sent to the applicant expeditiously by the Controller.

e) The procedure specified in rules 57 to 63 for post grant opposition for filing of written statement, reply statement; reply evidence, hearing and cost shall apply in this case.

f) When no opposition is received within a period of two months from the date of publication of the application for restoration, or opposition, if any, is disposed of in favour of the Patentee, the Controller shall issue an order allowing the application for restoration. The unpaid renewal fee and the additional fee, as mentioned in the first schedule, shall be paid within one month from the date of order of the Controller.

g) The fact that a patent has been restored shall be published in the official journal.

h) To protect the persons who have begun to use the applicant’s invention between the date when the Patent ceased to have effect and the date of Publication of the Application for restoration, every order for restoration includes the provisions and other conditions, as the Controller may impose, for protection and compensation of the above-mentioned persons. No suit or other proceeding shall be commenced or prosecuted in respect of an infringement of a Patent committed between the date on which the Patent ceased to have effect and the date of the Publication of the Application for restoration of the patent.

Opposition to the Restoration af a Lapsed Patent

  • If after hearing the applicant in cases where the applicant so desires or the Controller thinks fit, the controller is prima facie satisfied that the failure to pay the renewal fee was unintentional and that there has been no undue delay in the making of the application he shall publish the application in the prescribed manner and within the prescribed period any person interested may give notice for opposition for the restoration of the patent on either or both of the following grounds:-

a) That the failure to pay the renewal was not unintentional; or

b) That there has been undue delay in the making of the application for restoration (Section 61(1)).

  • No other Grounds are prescribed for filing such notice o opposition for the restoration of a lapsed patent. Only person interested can file the notice of opposition for the restoration of the lapsed patent.
  • The time period for filing the notice of opposition is two months from the date of publication and the same is filed on Form 14 with its prescribed fee. Indian Patent Act and the rules do not provide any extension beyond the period of two months for filing the opposition. However, a petition under Rule 138 of Patent Rules can be filled seeking extension of time beyond the two months period with its prescribed fees. It should be noted that the petition for extension to be filed within the period of two months only. Since the grant of the extension under rule 138 is the discretionary power of the Controller, the grant of extension cannot be taken for granted.

Rights of Patentee of Lapsed Patent which have been Restored SECTION 62

  • On the restoration of a patent, the rights of the patentee shall be subject to such provision as may be prescribed by the Controller in his order and to such other provisions as he thinks fit to impose for the protection of compensation of persons who might have began to avail them of. Or the patented invention between the date when the patent ceased to have effect and the date of publication of the application for the restoration of patent Section 62(1),
  • On the lapsing of the patent due to Nonpayment of the renewal fees, the patentee loses his right in the patent and the invention becomes public property. The provision contained in section 62 of The Act is to safeguard the interests of those persons who after ascertain from the Register of Patents that the patent has lapsed due to Nonpayment of the renewal fees and become public property had started commercially using the invention

Surrender of patents

(1) A patentee may, at any time by giving notice in the prescribed manner to the Controller, offer to surrender his patent.

(2) Where such an offer is made, the Controller shall advertise the offer in the prescribed manner, and also notify every person other than the patentee whose name appears in the register as having an interest in the patent.

(3) Any person interested may, within the prescribed period after such advertisement, give notice to the Controller of opposition to the surrender, and where any such notice is given the Controller shall notify the patentee.

(4) If the Controller is satisfied after hearing the patentee and any opponent, if desirous of being heard, that the patent may properly be surrendered, he may accept the offer and, by order, revoke the patent.

Management Notes

Invention and non-invention in Patent Act

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Invention under the Patent Act

The Act under Section 2(1)(j) defines “invention” as a new product or process involving an inventive step capable of industrial application.

The term “industrial application” refers to capable of industrial application in relation to an invention means that the invention is capable of being made or used in an industry. One of the pre-requisite of invention is that it should be new i.e. the invention proposed to be patented has not been in the public domain or that it does not form part of the state of the art.

Under the Patent Act, both processes and products are entitled to qualify as inventions if they are new, involve an inventive step and are capable of industrial application.

Requirements to Qualify as Invention

  1. The Invention must be new;
  2. Invention must involve an inventive step;
  • The invention must be capable of industrial application or utility;
  1. The invention shouldn’t come under the inventions which are not patentable under Section 3 and 4 of the Patent Act, 1970;

Non-patentable inventions are enumerated under Section 3 and 4 of the Patent Act. Such inventions are delineated below:

  • Any Invention which is frivolous or which claims anything obviously contrary to well established natural laws is not patentable.
  • Inventions which are contrary to public order or morality is not patentable.
  • An idea or discovery cannot be a subject matter of a patent application.
  • Inventions pertaining to known substances and known processes are not patentable i.e. mere discovery of a new form of a known substance which does not enhance the known efficacy of that substance is not patentable.
  • An invention obtained through a mere admixture or arrangement is not patentable.
  • A method of agriculture or horticulture cannot be subject matter of patent.
  • A process involving medical treatment of human and animals or to increase their economic value cannot be subject matter of a patent.
  • Plants and animals in whole or in part are not patentable.
  • A mathematical or business method or a computer program per se or algorithms is excluded from patent protection.
  • Matters that are subject matter of copyright protection like literary, dramatic, musical or artistic work is not patentable.
  • Any scheme or rule.
  • Presentation of information
  • Topography of integrated circuits.
  • Traditional knowledge.
  • Inventions relating to atomic energy
  • As defined in Section 2 (j)the term “invention means a new product or process involving an inventive step and capable of application”. The invention should be of absolute novelty as neither it has been used nor published in any part of the world.

Section 3 And 4 Of The Indian Patent Act

Section 3 and Section 4 of the Patent Act is highly debatable and deals with the list of exclusions that are non-patentable that do not satisfy the above conditions. Following are not the “inventions” under the meaning of this act:

(a) Inventions that are frivolous and contrary to natural laws.

Inventions which are frivolous or contrary to well established natural laws.

Example– Inventions that are against the natural laws that are any machine giving 100% efficiency, or any machine giving output without an input cannot be considered as obvious and cannot be patented.

b) Inventions which go against public morality

Inventions in which the primary or intended use or commercial exploitation of which could be contrary to public order or morality (that is against the accepted norms of the society and is punishable as a crime) or which causes serious prejudice to human, animal or plant life or health or to the environment.

Example–As in Biotechnology, termination of the germination of a seed by inserting a gene sequence that could lead to the disappearance of butterflies, any invention leading to theft or burglary, counterfeiting of currency notes, or bioterrorism.

(c) Inventions that are a mere discovery of something that already exists in nature.

The mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living or non-living substances occurring in nature.

Explanation–Mere discovery of something that is already existing freely in nature is a discovery and not an invention and hence cannot be patented unless it is used in the process of manufacturing an article or substance. For instance, the mere discovery of a micro-organism is not patentable.

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Landmark Cases of Non-patentable Inventions

In Bilski V. Kappos,

This case deals with the Patentability of a business method. In this case, Bilski and Warsaw applied for the patent on hedging risks on commodities trading but their patent got rejected by the US Supreme Court on grounds that an abstract idea cannot be patented.

(d) The mere discovery of a form already existing in nature does not lead to enhancement of efficacy.

The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they are significantly different in terms of efficacy.

The mere discovery of any new property or use of a known substance is not patented unless it is of greater efficiency than the original substance hence, the mere incremental innovation does not fall under the gamut of patenting.

(d) The mere discovery of a form already existing in nature does not lead to enhancement of efficacy.

The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they are significantly different in terms of efficacy.

The mere discovery of any new property or use of a known substance is not patented unless it is of greater efficiency than the original substance hence, the mere incremental innovation does not fall under the gamut of patenting.

Case laws
In Glochem Industries Ltd vs Cadila Healthcare Ltd14,[2]

The Bombay High Court held that “Section 3 (d) consists of all fields including the field of pharmacology. Further, in this case, the court held that “the test to decide whether the discovery is an invention or not? It is on the patent applicant to show that the discovery has resulted in enhancement of known therapeutic efficacy of the original substance and if the discovery is nothing other than the derivative of a known substance, then, it must be shown that the properties in derivatives are significantly different in terms of efficacy. So under this sub-section, the very discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance will not be treated as an invention.

In Ten Xc Wireless Inc & Anr vs Mobi Antenna Technologies,

The Delhi High Court held that “a method of replacing conventional antennae with split-sector antennae; a split-sector asymmetric antenna for replacing conventional antennae – are all mere uses for the asymmetric antenna already known. Under Section 3(d) the subject matter claimed is therefore not an invention.

In Novartis Ag v. Union of India15,

The Supreme Court of India said that “mere discovery of an existing substance would not amount to the invention”. The Supreme Court of India further, in this case, held that for pharmaceutical patents apart from tests of novelty, inventive step and application, there is a new test of enhanced therapeutic efficacy for claims that cover incremental changes to existing drugs which also Novartis’s drug did not qualify”.

(e) Mere admixing of mixtures leading in the aggregation of properties are non- patentable.

A substance obtained by a mere admixing of two or more mixtures resulting only in the aggregation of the properties of the components thereof or a process for producing such substance is not considered the invention.

Explanation- mere addition of mixtures is non-patentable unless this satisfies the requirement of synergistic effect i.e., interaction of two or more substances or agents to produce a combined effect greater than the separate effect.

(f) Mere aggregation or duplication of devices working in a known way is not an invention.

The mere aggregation or re-arrangement or duplication of known devices each functioning independently of one another in a known way.

Explanation- mere improvement on something or combinations of different matters known before cannot be patentable unless this produces a new result or article.

(h) Horticulture or agricultural method is non-patentable.

A method related to agriculture or horticulture.

Explanation- a method of producing plants like cultivation of algae and mushrooms or improving the soil is not an invention and cannot be patentable.

(i) Medicinal, curative, prophylactic, diagnostic, therapeutic for treating diseases in human and animals are non-patentable.

Any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products.

Explanation: those medicinal methods administering medicines orally or injecting it, surgical methods like stitch free surgeries, curative methods as curing plaques etc does not fall under the ambit of the invention and are non- patentable.

Case law
In Mayo Collaborative Services V. Prometheus Laboratories, Inc20.

In this case, the US Supreme Court said that “diagnostic and therapeutic methods (which includes the treatment or cure of diseases) is not patentable as it claims a law of nature”.

(j) Essential biological processes for the production or propagation of animals and plants is not an invention.

Plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals.

(k) Simple mathematical or business or computer programs are not an invention.

A mathematical or business method or a computer program per se or algorithms;

Explanation– any mathematical calculation, any scientific truth or act of mental skills any activities related to business methods or algorithms (which are like the law of nature) cannot be patented.

(l) Aesthetic creation is not an invention.

A literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions.

Explanation– such activities like writings, painting, sculpting, choreographing, cinematographing all these which are related to creativity cannot be patented and fall under the gamut of Copyright Act, 1957.

(m) Mental act, rule or method is not an invention.

A mere scheme or rule or method of performing mental act or method of playing a game.

Explanation- playing a game such as chess, sudoku etc are not considered as inventions rather these are mere brain exercises and hence are not patented.

(n) Presentation of information is non-patentable.

Explanation- a mere presentation of information by tables, chars is not an invention and hence are not patentable, for example, railway timetables, calendars etc.

(o) The topography of integrated circuits is non-patentable

Such as semiconductors used in microchips are not patented.

(p) Traditional Knowledge is not an invention.

An invention which in effect, is traditional knowledge or which is an aggregation or duplication of known properties of the traditionally known component or components.

Explanation- the traditional knowledge is know-how, skills, that is passed from generations to generations of a community and is already known cannot be patented for example the antiseptic properties of turmeric.

(q) Atomic-Energy inventions are non -patentable.

Section 4 deals with inventions relating to atomic energy, that are also not patentable and that fall within sub-section (1) of section 20 of the Atomic Energy Act, 1962.

Will NCPI (Bhim) Qualify For Patents?

Unified Payments is a payments mechanism that allows bank customers to send and receive money via a smartphone in real time. These payments settlements technology has been developed by NPCI (National Payments Corporation of India) which is a Reserve Bank of India backed entity with support from Indian banks.

NPCI indicated that the proximity-based solution offered by Tone Tag(a Bangalore based tech startup) could employ a tone, a sound, a near field communication (NFC), a radio-frequency identification device (RFID) or deploy ultra-high frequency (UHF) technology or a combination of these relying upon algorithm encryption. The request for proposal of NCPI added a  clause that raises questions about whether NPCI’s RFP violates Section 3(k) of the Act, as amended in 2002, lists ‘a mathematical or business method or a computer programme per se or algorithms’ under ‘inventions not patentable.

Patentability of Artificial Intelligence

The AI applications are modern-day machine learning functions and are of significant importance, especially in the commercial AI sector. However, the question is, should AI be patentable?

Indian Patent System for AI-based inventions

In India for patenting an AI technology one needs to follow the Computer-related Inventions (CRIs) guidelines which exclude a computer programme or algorithms from being patented (under 3(k) of the Indian Patent Act). At present these guidelines are focused on computers/algorithm/software based inventions and also are used to examine AI based inventions.

To claim for patenting the inventions based on AI following are needed:

  • Describe hardware (eg computer system, server, sensors etc.) along with AI algorithms in your patent;
  • Claim working method/process of the invention which uses AI; and
  • Refrain from focussing directly on programming codes/algorithms of AI.

The word “Artificial Intelligence” can be seen in claims of the granted patents but it is to be noted that this word is used to represent part of a system that utilizes data/commands provided by AI system. However, no focus is made on the operating principle of AI.

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