In general, the prohibition of making an Ohel (tent) only applies when the overhanging is positioned above four walls. However, if the intent of the overhanging is to provide shelter or protection for that which is beneath it, it is prohibited even without walls.
Based on this, the question arises whether it is permitted to hold a Talet over the heads of the children who receive an Aliya on Simchat Torah. Does this custom constitute a problem of Ohel?
Hacham Ovadia (Yabia Omer 7:55) presents two reasons why it is permitted. First, the Bet Meir (Rabbi Meir Posner, 1729-1807) rules that any Ohel that is held up by people is not considered a bona fide Ohel. Second, An Ohel without walls is only a problem when it serves to protect that which is underneath it. Here, the Talet is not being held over the children to protect them from the elements. It is done for Kavod (dignity), so that they feel special.
It should be noted that the Tehila L’david held that this custom is prohibited, since there is not only a roof (the Talet), but also walls-the people standing around the perimeter. However, the Poskim reject his approach, based on a Gemara (Erubin 44) which states that a person can constitute a Halachic wall only if he has specific intent to do so. Therefore, the Talet is only a roof, without walls, and is not prohibited in this case.
SUMMARY
It is permitted to spread a Talet over the heads of the children called to the Torah on Simhat Torah.