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2025 Supreme(Online)(ITAT) 7772
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
MS. KAVITHA RAJAGOPAL, JM, SHRI OMKARESHWAR CHIDARA, AM
Legsys AI Technology Foundation – Appellant
Versus
Commissioner of Income Tax (Exemptions), Mumbai – Respondent
ITA Nos. 4757 & 4761/Mum/2025
For the Appellants/Petitioners: Shri V. Sridharan, Shri Samyak Lohodi, Ms. Priyanshi Chokshi
For the Respondents: Shri Rajesh Kumar Yadav, (CIT DR)
The activities of enhancing judicial efficiency through AI technology qualify as charitable under the Income Tax Act, 1961.
Headnote:(A) Income Tax Act, 1961 - Sections 2(15), 12AB, and 80G - Charitable Status - The appellant’s application for registration was rejected on grounds of not meeting charitable nature criteria; the Tribunal allowed the appeal citing the appellant promotes social welfare by enhancing access to justice with AI technology. (Paras 5, 10, 11, 14)
| Table of Content |
|---|
| 1. introduction and context of the appeals. (Para 1) |
| 2. facts regarding the organization's activities and application for registration. (Para 4 , 5) |
| 3. arguments presented by both parties concerning the nature of activities. (Para 6 , 8 , 9) |
| 4. judicial observations on charitable purpose definitions and implications. (Para 10 , 11 , 12 , 15) |
| 5. conclusion resulting in the allowance of appeals. (Para 16 , 17) |
ORDER
Per Kavitha Rajagopal, J M:
These captioned appeals have been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Exemptions) Mumbai (‘ld. CIT(E)’ for short), rejecting the grant of registration u/s. 12AB and 80G of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2025-26.
2. As the facts are identical, we hereby pass a consolidated order by taking ITA No.4757/Mum/2025 as a lead case.
3. The assessee has raised the following grounds of appeal:
“1. That on the facts and in the circumstances of the case and in law, the Ld. CIT- (E) has grossly erred in rejecting the Appellant's application for grant of registration u/s 12A.
2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(E) grossly erred in holding that the activities carried on by the Appellant do not quality the test of 'charitable purpose as defined in Section 2 (15) of the Act, without appreciating that the Appellant has been incorporated wholly and exclusively for charitable purposes and to promote social welfare by (a) enhancing access to justice for the public at large by leveraging Artificial Intelligence ("AI") and technology, and (b) improving functioning of courts across India by providing them pro bono Al-based technical support and training which will result in early disposal of litigations pending before various judicial forums.
3. That on the facts and in the circumstances of the case and in law, the CIT(E) grossly erred in holding that the activities of the Appellant are in violation of Section 2 (15) of the Act, without appreciating that the activities carried on by the Appellant are entirely for the benefit of the public at large.
4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(E) grossly erred in holding that "the activities undertaken by the applicant Trust with respect to the grants received under the MOU from both the abovementioned entities [Vaya Trust 4 and Nudge Life Skills Foundation) are only in the nature of providing services, as per the agreements made between the parties in lieu of grants received." without appreciating that the donations were received to provide Al- based tools and support for the benefit of the Indian judiciary and litigants, and that no part the activities enure benefits to the donor.
5. That on the facts and circumstances of the case and in law, the Ld. CIT(E) grossly erred in not appreciating that the Appellant is not offering any technical or commercial services, software, or tools to Vaya Trust 4, Nudge LifeSkills Foundation or any other donor. The Al tools and software are exclusively provided to Indian courts and litigants on a pro bono basis.
6. That on the facts and in the circumstances of the case and in law, the Ld. CIT-(E) has grossly erred in not appreciating that the MoU entered into with Vaya Trust 4 clearly states that the grant is provided "to implement Al-based court stenography and transcription project to support courts build capacity and reduce delays and backlogs." This is in line with the object of the Appellant to enhance the efficiency of the courts and reduce judicial delays.
7. That on the facts and in the circumstances of the case and in law, the Ld. CIT-(E) has grossly erred in not appreciating that the MoU entered into with Nudge Life Skills Foundation clearly states that the grant is provided to develop "a comprehensive Case Flow Management system that integrates Al tools into a centralized platform, designed for courtrooms. The application
