Question

Somesh and Ramesh are partners in a firm with capitals of $Rs.3,00,000$ and $Rs.4,00,000$ respectively. They do not have a Partnership Deed. Ramesh wants to share the profits in the ratio of capitals. State with reasons whether the claim is valid.

Answer 1

Partnership deed is the legal document containing all the terms and conditions on which the partnership is based and is signed by all the partners. If there is no partnership deed,partners are still entitled to share profits and losses. The ratio of sharing shall be equal even if they contribute different amount of capital.

So, the contention of Ramesh to share profits in the ratio of capital is invalid. Somesh and Ramesh have to share profits and losses equally in absence of a partnership deed.