Retrospective withdrawal of approval cannot defeat section 35CCA deduction for donations made while approval was in force.

Deduction under section 35CCA was available where donations were made to an institution approved for a rural development programme during the period when the approval remained in force. A later attempt to withdraw that approval retrospectively could not defeat the deduction, because no retrospective power was found in section 35CCA and statutory approval ordinarily operates prospectively unless the provision clearly authorises otherwise. The assessee could rely on the original approval and the assurance underlying it, and promissory estoppel was held capable of operating against the Revenue on the facts stated. As there was no material showing breach of the statutory conditions, the donation-based deduction was upheld.

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Issues: Whether the assessee was entitled to deduction under section 35CCA for donations made to an approved rural development institution, notwithstanding the subsequent retrospective withdrawal of that institution's approval.

Analysis: The deduction under section 35CCA is available where the assessee incurs expenditure by payment to an institution approved for carrying out a rural development programme and satisfies the prescribed certificate requirement. The assessee had made the donations during the relevant previous year while the institution's approval, granted under section 35CCA, was in force. The later withdrawal of approval was sought to be given retrospective effect, but a statutory approval or notification ordinarily operates prospectively unless the enabling provision clearly authorises retrospectivity. No such retrospective power was found in section 35CCA. The Court also held that the assessee could rely on the original approval and the assurance underlying it, and that the doctrine of promissory estoppel could operate against the Revenue in the circumstances. There was no material showing that the assessee itself had violated the statutory conditions or that the donations were not made to the approved institution during the currency of the approval.

Conclusion: The assessee was entitled to the deduction under section 35CCA, and the claim could not be denied on the basis of the later retrospective withdrawal of approval.

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