What is deemed dividend under Sec 2(22)(e) of the Income Tax Act, 1961 ? Discuss its taxability.

Section 2(22)(e) of the Income Tax Act, 1961 defines the term deemed dividend as any payment by a company, not being a company in which public are substantially interested, of any sum by way of advance or loan to the following: To a shareholder, being a person who is the beneficial owner of the shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits), holding not less than 10% of the voting rights, or To any concern in which such shareholder is a member or a partner and in which he has a substantial interest, or On behalf, of for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits. Exceptions to deemed dividend: any advance or loan made, to a shareholder or to such concern in which the shareholder is interested, by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company; any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is so set off; any payment made by a company on purchase of its own shares from a shareholder in accordance with the provisions of Section 68 of the Companies Act, 2013; any distribution of shares pursuant to a demerger by the resulting company to the shareholders of the demerged company (whether or not there is a reduction of capital in the demerged company). Finance Act, 2018 has brought the deemed dividend within the ambit of dividend distribution tax under section 115-O, at the rate of 30% in the hands of the closely held companies. As per the provisions of Section 10(34), dividend income under section 2(24)(e) is 100% exempt in the hands of the shareholders as it is charged to Dividend Distribution Tax under section 115-O of the Income Tax Act, 1961.