What is Deemed dividend u/s 2(22)(e)

Concept of deemed dividend u/s 2(22) (e):

If any sum by way of loans and advances, advanced by a closely held company (company in which the public are not substantially interested) to its beneficial shareholder holding at least 10% of the voting power/shareholding or to any concern in which such shareholder is a member, or a partner and in which he holds at least 20% of the shareholding/voting power, to the extent of accumulated profits of such closely held company, are considered as deemed dividends.

Deemed dividend is illustrated through below example:

Taxability of Deemed dividends