Donation deduction under section 35(1)(ii) survives later retrospective cancellation when approval was valid on the donation date.

Deduction under section 35(1)(ii) for donations to an approved institution is available where the approval was valid and subsisting on the date of donation. A later retrospective cancellation of that approval does not, by itself, defeat the donor's claim for the relevant assessment year. On the facts, the donation receipts and approval records showed valid approval when the payments were made, so the deduction could not be denied on the basis of the subsequent withdrawal. The addition was deleted and the assessee's appeal succeeded.

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Issues: Whether the assessee was entitled to deduction under section 35(1)(ii) of the Income-tax Act, 1961 for donations made to an approved institution, when the approval was cancelled retrospectively after the donations were made.

Analysis: The donation receipts and approval material showed that the institution had valid approval under section 35(1)(ii) at the time the donations were made. The subsequent withdrawal of approval was retrospective, but the governing legal principle applied was that a donor's entitlement depends on the approval being valid and operative when the donation is made. Once the assessee had acted on a subsisting approval, later cancellation could not undo the deduction claim for the relevant assessment year.

Conclusion: The deduction under section 35(1)(ii) could not be denied on the basis of the later retrospective cancellation of approval, and the issue was decided in favour of the assessee.

Final Conclusion: The addition was deleted and the assessee's appeal succeeded.

Ratio Decidendi: A deduction linked to donation to an approved institution cannot be denied if the approval was valid and subsisting on the date of donation, and a later retrospective cancellation does not defeat the donor's claim.

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