Question

A, B and C are partners in a firm. They have no partnership deed for their guidance. At the end of the year, they have faced the following problem:
A wants that interest on capital should be allowed to the partners but B and C do not agree.
State how will you settle the dispute if the partners approach you for the purpose. Select the correct option as per your decision.

• A. According to the Partnership Act, no interest on capital will be allowed. Since the partnership deed is absent.
• B. According to the Partnership Act, interest on capital will be allowed.
• C. According to the Partnership Act, interest on capital will be allowed. Since there is no agreement.
• D. Interest on capital will be allowed. Since the partnership deed is absent

Answer 1

The correct option is A According to the Partnership Act, no interest on capital will be allowed. Since the partnership deed is absent.

Indian partnership act 1932 states that if a specific partnership deed is not there in a partnership firm, then partners are not allowed to receive any interest on their capital.

The dispute between A, B and C will be solved when A agrees to B and C because they both are correct with their statment since no interest on capital isgiven to partners without a deed as per Indian partnership act.