DIPP Notification on Startups
The Department of Industrial Policy and Promotion issued a notification dated April 11, 2018 wherein it has specified the criteria for a company to qualify as a “startup”. Further, the notification lays down the format for application for certificate for the purpose of Section 80-IAC of the Income Tax Act, 1961 (“the Act”). This section was introduced to incentivize eligible startups under the Act by providing 100% tax deduction on the profits and gains made by the startup for three consecutive assessment years.
Impact of Section 50CA of Income Tax Act on Angel Investors
In accordance with Section 50 CA of the Act, the newly introduced Income Tax Returns form, effective from April 01, 2018, requires investors to disclose deal valuations and accurately record all capital gains accrued on all transfers made. The Finance Act 2017 introduced the Section 50 CA in the Act in order to bring unquoted or under-quoted shares under the ambit of taxation by deeming the entire Fair Market Value (“FMV”) consideration for transfer of shares quoted below FMV. Furthermore, a July 12, 2017 notification of the Central Board of Direct Taxes notified the rules for the calculation of fair market value under the above mentioned Section 50 CA of the Act, with effect from April 01, 2018.
SEBI to Revise Regulations on Buy-Back of Securities
In the March 28, 2018 Securities and Exchange Board (“SEBI”) meeting, the initiation of a public consultation process for review of the SEBI (Buy-Back of Securities) Regulations, 1998, was approved. The purpose of such review is to update the language of the Regulations to reflect the extant practises with respect to the latest provisions of the Companies Act, 2013 and other SEBI regulations.
SC on Specific Performance and Permanent Injunction
The Supreme Court in its judgement in Sucha Singh Sodhi v Baldev Raj Walia dated April 13, 2018 has held that the cause of action to claim a relief of permanent injunction and the cause of action to claim a relief of specific performance of agreement are independent and one cannot include the other and vice versa. By making this distinction, the Supreme Court essentially disallowed the clubbing together of the above mentioned two remedies in a single suit.
SC on “Government Works” under Copyright Act
The Supreme Court in its judgment in B.N. Firos v State of Kerala & Ors. dated March 27, 2018, held that only those ‘Computer Systems’ may be designated as protected system under the Information Technology Act, which qualify as ‘Government Works’ under the Copyright Act. The issue in this case was the validity of Section 70(1) of the Information Technology Act, 2000 (“IT Act”), whereby the Government has the power to declare any computer system or network as a “protected system”. Under this section, breach of or gaining unauthorized access to the “protected system” is punishable with imprisonment. The Supreme Court resolved resolve the validity of this contentious section with respect to Article 14 of the Constitution and Section 17 of the Indian Copyright Act, 1957 (“Copyright Act”); holding that there was no conflict between the Copyright Act and the IT Act, as only the copyright on the software owned by the Government could be the subject of a notification under Section 70(1) of the IT Act.
Delhi HC Invalidates Monsanto’s Bt Technology Patent
A division bench of the Delhi High Court in its judgment in Nuziveedu Seeds v Monsanto Technology & Ors. dated April 11, 2018, held that the Bt Technology cotton patented by Monsanto is invalid on the grounds of application of Section 3(j) of the Patents Act, 1970 which prohibits the grant of patents for plants, plant varieties or seeds or any part thereof. The Delhi High Court however, extended an olive branch to Monsanto by awarding a three month buffer period to seek protection for its invention under the Plant Variety Protection & Farmer’s Rights Act, 2002.