The issue involved was with regard to taxation of Deemed dividend u/s 2(22)(e).

Here,  Assessee company has taken loans from the three concerns.

Assessee submitted that the loan amounts in question treated as deemed dividend u/s 2(22)(e) by the AO were taken by the assessee-company from the three concerns on interest and since the said lending companies were compensated by interest paid by the assessee-company on the loans, the assessee-company in real sense did not derive any benefit from the said loans so as to attract the provisions of section 2(22)(e) –

ITAT held as under:

In in the case of Pradip Kumar Malhotra [2011 (8) TMI 16 – CALCUTTA HIGH COURT] wherein it was held that the phrase “by way of advance or loan” appearing to sub-clause (e) of section 2(22) must be construed to mean those advances or loans which a shareholder enjoys for simply on account of being a beneficial owner of shares, but if such loan or advance is given to such shareholder as a consequence of any further consideration, which is beneficial to the company, received from such shareholder, in such case, such advance or loan cannot be said to be deemed dividend within the meaning of section 2(22)(e).

Gratuitous loan or advance given by a company to those classes of shareholder thus would come within the purview of section 2(22)(e) and not the cases where loans or advances given in return to an advantage conferred upon the company by such shareholder.

In the present case, the entire amount in question was taken by the assessee-company on interest and since the interest on the said loan was duly paid by the assessee-company after deducting tax at source, we find no infirmity in the impugned orders of the Ld. CIT(A) in deleting the addition made by the AO treating the said amount as deemed dividend under section 2(22)(e)

 With above observation, the issue was decided against revenue

Conclusion:
In the present case, the entire amount in question was taken by the assessee-company on interest and since the interest on the said loan was duly paid by the assessee-company after deducting tax at source, we find no infirmity in the impugned orders of the Ld. CIT(A) in deleting the addition made by the AO treating the said amount as deemed dividend under section 2(22)(e)