Is it permissible to write the word (Ilah - God) as (ilah - إلاه) instead of (Ilah - إله)?

The spelling of "إله" (ilah) in this manner is grammatically incorrect. The correct way is to remove its alif, so it is written as "إله" (ilah). It is among the words whose alif is omitted in writing but not in pronunciation due to frequent usage. Examples include: "الله" (Allah), "هذا" (hadha), "لكن" (lakin). There is no harm in writing it in any manner outside of the Mushaf (Qur'an).