At about 1120 eastern time, a Bellanca 8KCAB collided with a tree on approach to Leeward Air Ranch during an instructional flight. The flight instructor and pilot-rated student were not injured. The CFI reported that he was instructing the pilot in a return to the departing runway after a hypothetical engine failure. He closed the throttle on departure at about 700 feet agl. The student then initiated a left hand steep turn back to the runway, but the airplane entered a spin. The CFI assumed control of the flight but struck an oak tree during recovery.