Question

NO PARTNERSHIP DEED EXIST
(Absence of Partnership Deed )Partners A and B have contacted you to solve their
dispute. They do not have any deed.
6 A and B have invested * 70,000 and 7 1,00,000 as capital respectively and they claim
interest on capital @ 10% p.a.
(i) B gave 12,000 as loan to the firm. He claims interest on loan @ 8% p.a.
in A withdrew * 15,000 during the year and B asked to charge interest on drawings at 6%
(iv) A's son C is MBA. He wants his son to be partner in the firm, B objects to this.
(v) B is incharge of sales. He wants commission at 9% on sales.
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Answer 1

a. As per the Indian Partnership Act, 1932, Interest on capital will not be allowed in absence of partnership deed.

b. As per the Indian Partnership Act, 1932, Interest on loan will be allowed @ 6% p.a. in absence of partnership deed.

c. As per the Indian Partnership Act, 1932, Interest on drwaings will not be charged in absence of partnership deed.

d. A's son will not be admitted in the partnership as a partner because in absence of partnership deed, a new partner can only be admitted if all the existing partners agree for the new partner to be admitted.

e.  As per the Indian Partnership Act, 1932, no commission will be given to B in absence of partnership deed.