Question

Write a brief note on the applications of the provisions of the Indian Partnership Act, 1932 in the absence of a partnership deed.

Answer 1

Applications of the provisions of the Indian Partnership Act, 1932 in the absence of partnership deed.

1. Remuneration to partners: No salary or remuneration is allowed to any partner. [Section 13(a)]
2. Profit-sharing ratio: Profit and losses are to be shared by the partners equally. [Section 13(b)]
3. Interest on capital: No interest is allowed on the capital. When a partner is entitled to interest on capital contributed as per partnership deed, such interest on capital will be payable only out of profits. [Section 13(c)]
4. Interest on loans advanced by partners to the firm: Interest on the loan is to be allowed at the rate of 6 percent per annum. [Section 13(d)]
5. Interest on drawings: No interest is charged on the drawings of the partners.