Leasehold construction by a charitable trust did not attract section 13(1)(c)(ii); exemption under section 11 remained available.

Construction of a building on leasehold land did not, on the facts, trigger section 13(1)(c)(ii) merely because the trustees were the lessors. The registered lease deed did not provide that the superstructure would automatically vest in the lessor on expiry of the lease, and the assessee remained free to remove the constructions after the lease term. As no direct benefit to the trustees was established from the construction, the factual basis for invoking section 13(1)(c)(ii) failed, and the charitable trust remained entitled to exemption under section 11.

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Issues: Whether the construction of a building on leasehold land owned by trustees, in the circumstances of the case, attracted section 13(1)(c)(ii) so as to deny the benefit of section 11 to the charitable trust.

Analysis: The registered lease deed did not stipulate that the superstructure would automatically vest in the lessor on expiry of the lease. The Court found that after the lease term the assessee would remain free to remove the constructions, so no direct benefit would necessarily accrue to the trustees merely because they were the lessors. On that basis, the factual premise for invoking section 13(1)(c)(ii) was not established.

Conclusion: Section 13(1)(c)(ii) was not attracted and the trust was entitled to the benefit of section 11.

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