Raju and Jai commenced business in partnership on April 1, 2017. No partnership agreement was made whether oral or written. They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capitals. In addtion, Raju advanced Rs. 2,00,000 as loan to the firm on October 1, 2017. Raju met with an accident on July 1, 2017 and could not attend the business up to september 30, 2017. The profit for the year ended March 31, 2018 amounted to Rs, 50,600. Disputes have arisen between them on sharing the profits of the firm.
Raju Claims:
(i) He should be given interest at `10% `p.a. on capital and so also on loan.
(ii) Profit should he distributed in the proportion of capitals.
Jai Claims:
(i) Net profit should be shared equally.
(ii) He should be allowed remuneration of Rs, 1,000 p.a. during the period of Raju’s illness.
(iii) Interest on capital and loan should be given @ 6% p.a.
State the correct position on each issue as per the provisions of the Partnership Act. 1932.
Answers
Following are the correct positions on each issue.
Explanation:
when partners have no oral or written agreement between them, the provisions of partnership act, 1932 are applied, in which when there are no agreement between partners following rules are followed:-
1) no interest on capitals.
2) no interest on drawings.
3) no salary.
4) partners will share profits and losses equally.
5) interest on loan @ 6 %
given, Raju and Jai don't have a agreement, and dispute arise between them, the correct position on each issue as per provisions of partnership act is as follows :-
i) Raju can't claim any interest on loan in the absence of a partnership agreement. but @ 6 % interest on loan will be given to him.
ii) Raju can't claim profit in the proportion of capitals in the absence of partnership deed, Raju and Jai will share profits equally.
iii) Jai's claim is correct as in the absence of agreement, profits and losses will be shared equally.
iv) Jai can't claim any remuneration as in the absence of partnership.
v) Jai can't claim any interest on capital in the absence of a partnership agreement. but @ 6 % interest on loan is allowed as per law.