(1) A society earning profit shall calculate the net profits by deducting from the gross profits for the year, all accrued interest which is overdue or more than six months establishment charges, interest payable on loans and deposits audit fees working expenses including repairs, rent, taxes and depreciation, and after providing for or writing off bad debts and losses not adjusted against any fund created out of profit. A society may, however, add to the net profits for the year, interest accrued in the preceding years but actually recovered during the year. The net profits thus arrived at together with the amount of profits brought forward from the previous year, shall be available for appropriation.
(2) A society may appropriate its profits to the reserve fund or any other fund to payment of dividends to members on their share, to the contribution to educational fund of the territory level federal society which may be notified in this behalf by the Government to the payment of bonus on the basis of the support from the members and persons who are not members to its business to payment of honoraria, and towards any other purpose which may be specified in the rules or bye-laws.
Provided that, no part of the profits shall be appropriated except with the approval of the annual general meeting and in conformity with the Act, rules and bye-laws.