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The Indian Partnership Act 1932



Definition: Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.

Therefore partnership is:

An association of two or more persons
Must be an agreement
Agreement to carry on a business
Agreement to share the profits of a business
Business must be carried on by all or any one acting for all (mutual agency)

Following is not partnership :

Receipt of share of profits in a venture by a lender of money to persons about to engage in business
By a servant or agent as remuneration
By the widow or child of a deceased person as annuity
By a previous owner or part owner of the business as goodwill

Types of Partnership: Partnership at will (i.e. when partnership is not for a fixed period) and Particular Partnership (i.e. when partnership is for a particular period or venture).

Registration: While Registration per se is not mandatory under the partnership Act the firm and partners if they wish to benefit from the provisions of the Income Tax Act need to register themselves. There are other legal advantages w.r.t. Registration such as the right to sue amongst themselves or the firm and third parties is available only if they register whereas the right of third parties is not affected.

Rights of Partners:

Business Rights: To take part in the conduct of the business
To express his opinion on any matter
To have access to and inspect and copy any books of the firm
In emergency have rights to do all such acts to prevent the firm from
Incurring losses.

Property Rights: to share equally the profits of a...