Question

Assertion (A): Partnership is the relation between persons who have agreed to share the profits of the business carried on by all or any of them acting for all.

Reason (R): If a partner carries on any business of the same nature and competing with that of the firm, he/she shall account for and pay to the firm all profit made by him/her in that business.

Choose the correct option from the following:

Options

• Both (A) and (R) are correct.

• Both (A) and (R) are incorrect.

• Both (A) and (R) are correct and (R) is the correct explanation of (A).

• Both (A) and (R) are correct and (R) is not the correct explanation of (A).

Answer 1

Both (A) and (R) are correct and (R) is not the correct explanation of (A).

Explanation:

Both the assertion and the reason are correct. The assertion defines partnership as per Section 4 of the Indian Partnership Act, 1932. The reason is also valid, stating that if a partner runs a competing business, they must account for and pay the profits to the firm as per Section 16(a). However, the reason does not explain the assertion, so the correct answer is that both are correct, but the reason is not the explanation of the assertion.