Deemed dividend rules cannot be treated as actual payment for settlor attribution under a separate income tax provision.

A deemed dividend under section 22 of the East African Income Tax (Management) Act, 1952 created a limited fiction only for taxing undistributed company profits and could not be carried into section 24. Section 24 applied only where income was actually paid to or for the benefit of a child under a settlement, so the natural meaning of "paid" could not be expanded by the section 22 deeming rule. The provisions were treated as independent charging provisions, and the fiction for one could not alter the operation of the other. The deemed dividend was therefore not a payment within section 24, and the assessments had to be amended.

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Issues: Whether dividend deemed to have been distributed under section 22 of the East African Income Tax (Management) Act, 1952 could be treated as income "paid" to or for the benefit of a child within section 24 so as to tax the settlor on that amount.

Analysis: Section 22 created a limited fiction for the specific purpose of taxing undistributed company profits by deeming a dividend distribution to shareholders and including the shareholder's proportionate share in that shareholder's total income. Section 24, by contrast, applied only where income was in fact paid to or for the benefit of a child under a settlement, and it attributed such income to the settlor. The two provisions operated as independent charging provisions and could not be treated as a single coordinated scheme. The deemed dividend under section 22 could not be imported into section 24, because the fiction created for one section could not alter the natural meaning of "paid" in the other. The surrounding provisions also supported that construction, since they were framed around actual payment and the machinery of assessment that followed a real or section-specific deemed distribution.

Conclusion: The deemed dividend under section 22 was not a "payment" within section 24. The appeal was allowed and the assessments were to be amended accordingly.

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