Question

When no specific provision is provided in the Partnership Deed, a partner :

• A. Is entitled to interest on advance given by him at the rate of 6% per annum
• B. Is entitled to such interest only out of profits
• C. Shall identify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm
• D. All of the above

Answer 1

Answer: (D)

All of the above

Partnership comes into existence as a result of agreement among the partners. The agreement can be either oral or written. This agreement is also known as partnership deed. It is not compulsory to have a partnership deed for a partnership firm. Hence if a firm is not having any written agreement or a partnership deed or if partnership deed is there but it is silent on certain issues the following provisions of the Indian Partnership Act 1932 will be applicable.

• 1. Profit sharing Ratio : Profits and losses would be shared equally among partners.
  
• 2. Interest on capital : No interest on capital would be allowed to partners. If there is an agreement to allow interest on capital it is to be allowed only in case of profits.
  
• 3. Interest on drawings: No interest on drawings would be charged from partners.
  
• 4. Salary: No salary or commission is to be allowed to partners.
  
• 5. Interest on Loan : If apartner has provided any Loan to the firm, he would be paid Interest at the rate 6% p.a. This interest on laon is a charge against profits i.e. it is to be allowed even if there are losses to the firm.
  
• 6. Admission of a new partner: A new Partner can be admitted only with the consent of all the existing partners.
  
• 7. Right to participate in the business: Each partner has a right to participate in the proceedings of the business.
  
• 8. Inspection of the accounts of the firm: Each partner has the right to inspect the accounts of the firm and can have a copy of the same.