Question 1 (5 marks) Happy Recreation Club ("the Club) was incorporated in Hong Kong under the Companies Ordinance as a company limited by guarantee in 2008. The Club is the registered owner of the Building D in Hong Kong. In May 2018, the Club entered into a lease ("the Lease") with Bright Limited (which is not a member of the Club) in respect of the ground floor of the Building D at a monthly rent of $30,000 ("the Rent") for the period from 1 June 2018 to 31 May 2020. Bright Limited operated a restaurant on the ground floor to serve both members and non-members of the Club. In January 2019, the Club entered into an agreement ("the Agreement") with Full Limited, granting it a non-exclusive right of use of the roof of the Building D. Under the Agreement, Full Limited was only allowed to use the roof for the installation and operation of certain mobile communication equipment. The term of the Agreement ran from 1 February 2019 to 31 January 2020, and the fee payable thereunder was $20,000 per month ("the Fee"). To protect its rights under the Agreement, Full Limited is considering to register the Agreement in the Land Registry. Required:- a) With reference to Inland Revenue Ordinance, discuss whether the Club is chargeable to property tax in respect of the Rent and the Fee for the year of assessment 2018/19. [70 words] (3 marks) b) Assume that the Club is deemed not to be carrying on business in Hong Kong for the year of assessment 2018/19. With reference to Inland Revenue Ordinance, discuss whether any property tax exemption is available to the Club for the year of assessment 2018/19. [50 words]