Granted an interest free loan of ₹ 5 Lakh on 31.05.2023 to Mr. Kapil, an individual who later bought 12% equity shares of the company on 05-09-2023.

As decided in the case of Sagar Sahil Investment (P) Limited 120 TTJ 925, loan received by the assessee before becoming a registered shareholder of the lender company cannot be treated as deemed dividend u/s 2(22)(e) of the Act. Hence it cannot be treated as deemed dividend.