ITAT Mumbai Grants Section 12AB & 80G Registration to Foundation providing pro-bono AI-Based Judicial Support

The charitable foundation, incorporated under Section 8 of the Companies Act in January 2024, applied for registration under Sections 12AB and 80G of the Income Tax Act. The organisation’s aims to enhance access to justice by supporting courts across India with AI-driven transcription tools, workflow automation and training programmes for judges and judicial staff. It entered into MoUs with several High Courts and District Courts to implement its “Adalat AI” technology, a speech-to-text SaaS platform, and to provide operational support and capacity-building workshops on a pro bono basis, funded entirely through grants and donations.

The CIT (Exemptions), however, rejected the registration applications, alleging that the foundation’s activities were not charitable but resembled technical or commercial services in violation of Section 2(15). The commissioner further noted that the entity received significant grants from philanthropic organisations and claimed that the expenditure incurred did not demonstrate charitable application. Aggrieved, the Foundation appealed to the ITAT.

Main Issue: Whether an organization deploying AI-based justice-delivery tools and providing technical support to courts on a pro bono basis qualifies for charitable registration under Section 12AB and approval under Section 80G.

ITAT’s Verdict: The ITAT held that the Foundation’s activities clearly fall under the fourth limb of Section 2(15), “advancement of any other object of general public utility.” The Bench emphasised that the MoUs with various High Courts and judicial bodies contained no commercial terms, no service fees, and no quid-pro-quo arrangements. The entire work operated on a pro bono framework, and the Department failed to produce any evidence showing that the Foundation had engaged in trade, commerce, or business. The Tribunal also noted that improving judicial efficiency and reducing case pendency directly serves the public at large.

The Tribunal held that an organisation in its early years cannot be denied registration merely because its work is still evolving, especially when its objects are charitable. Citing judicial precedents, the ITAT held that the judiciary itself exists for public benefit, and aiding its functioning through technology is indeed an activity of general public utility. Thus, the rejection order was set aside, and the CIT(E) was directed to grant registration under Sections 12AB and 80G, subject to compliance with other statutory conditions.

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