State Financial Corporations Act, 1951
43. Provisions relating to income tax and super-tax
For the purposes of the 24[Income Tax Act, 1961 (43 of 1961)], the Financial Corporation shall be deemed to be a company within the meaning of that Act and shall be liable to income tax and super-tax accordingly on its income, profits and gains:
PROVIDED that any sum paid by the State Government under the guarantee given in pursuance of section 6 or section 7 or section 8 shall not be treated as the income, profits and gains of the Financial Corporation and any interest on debentures, bonds or deposits paid by the Financial Corporation out of such sum shall not be treated as expenditure incurred by it:
PROVIDED FURTHER that in the case of any shareholders such portion of a dividend as has been paid out of any such sum advanced by the State Government shall be deemed to be his income from "interest on securities" and the income tax shall be payable thereon as if it were the interest receivable on any security of a State Government issued income-tax free within the meaning of section 8 of that Act.