Short Answer

The proceeds from renting out unused space by a cooperative society, such as a shop, are typically considered as income for the society and should be utilized for the benefit of all members.

Detailed Explanation

Section 79 of the Gujarat Cooperative Societies Act, 1961 deals with the application of funds by a cooperative society. This section states that the surplus funds of the society, including income from renting out unused space, should be utilized for various purposes such as providing amenities, welfare activities, and other benefits to the members. In practice, this means that the proceeds from renting out space should be accounted for by the society and used in accordance with the objectives and rules of the society.

Rule 123 of the Gujarat Cooperative Societies Rules, 1965 provides further guidance on the maintenance of accounts by cooperative societies. According to this rule, the society is required to maintain proper books of accounts showing all transactions, including the income generated from renting out space. These accounts should be audited annually to ensure transparency and compliance with the law.

In a real-world scenario, if a cooperative society rents out a shop within its premises, the rent received should be recorded as income in the society's accounts. The society can then use this income for various purposes like maintenance of common areas, infrastructure development, or any other activities that benefit the members collectively.

Practical Examples

• ABC Cooperative Housing Society rents out a vacant space for commercial purposes and earns a monthly rent of Rs. 20,000. As per Section 79 of the Act, this income should be utilized for the welfare of all members, such as organizing community events or improving common facilities.

• XYZ Cooperative Society leases out a portion of its building for a small office setup and receives an annual rent of Rs. 1,50,000. Rule 123 of the Rules mandates that this rental income should be properly recorded in the society's accounts and disclosed during the annual audit.

• LMN Cooperative Society decides to rent out a parking area to generate additional income. The funds collected from this rental activity can be used to cover maintenance costs, security expenses, or any other essential services required by the society members.

References

• Section 79 of the Gujarat Cooperative Societies Act, 1961: [Official PDF]

• Rule 123 of the Gujarat Cooperative Societies Rules, 1965: [Official PDF]