how to form a partnership firm

8142015 How To Form A Partnership Firm

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howto | By VakilNo1

How To Form A Partnership Firm

Page Contents [hide]

DefinitionWhat constitutes a partnershipAgreement of partnershipTest of partnershipPartnership for an adventurePartnership an agencyPeriod of partnership



Rights and duties of partnersProperty of partnershipLimits on Agency of partnersRetirement of a partnerDissolutionTypes of partnershipPartnership under Companies ActPartnership under Income Tax ActPartnership and other bodies of IndividualsRegistrationLimited partnershipStamp Duty and RegistrationDeeds and Agreements

Definition

A Partnership is defined by the Indian Partnership Act 1932 as lsquothe relation between persons who have

agreed to share profits of the business carried on by all or any of them acting for allrsquo This definition givesthree minimum requirements to constitute a partnership viz (1) there must be an agreement entered into

orally or in writing by the persons who desire to form a partnership (2) the object of the agreement must beto share the profits of business intended to be carried on by the partnership and (3) the business must be

carried on by all the partners or by any of them acting for all of them The term lsquopersonrsquo is not defined by thePartnership Act Section 2(42) of the General Clauses Act defines lsquoa personrsquo to include a company or anassociation or body of individuals whether incorporated or not But the Supreme Court has held that this

definition cannot be imported into the Partnership Act and the lsquopersonrsquo under the Partnership Act meanseither an individual or any other legal entity such as a Limited Company registered under the Companies Act

or any other Corporation constituted by or under any act of the Legislature as a body corporate TheSupreme Court has observed that it is now well settled that Hindu Undivided Family cannot as such enter into

a contract of partnership with another person or persons because it is a fleeting body its composition changesby births and deaths marriages and divorces and such a partnership is likely to have a precarious existence

It therefore follows that a body of individuals such as an unincorporated society cannot as such become apartner in a firm It also follows that a partnership firm cannot as such enter into a partnership with another

individual or legal entity or with any other partnership firm because a partnership as such is not a person Butin the case of HUF the Karta of the family or a member thereof can become partner with another individualor with other legal entity or even with the partners or partner of a partnership firm because in such a case It is

the Karta or the individual member who is the partner for all purposes and not the joint family whom herepresents and the family does not become a partner of the firm It has been held that when two Kartas of

two HUFs enter into a partnership agreement the partnership though popularly known as one between thetwo HUFs in the eye of law it is a partnership between two Kartas and the other members of the two

families do not lsquoipso factorsquo become partners There is nothing to prevent individual members of one H U Ffrom entering into a partnership with the individual members of another HUF and in such a case it is the

partnership between the individual members and it is wholly inappropriate to describe such a partnership asone between two HUFs When the Karta of a HUF enters into a partnership with a stranger the membersof the family do not ipso facto become partners in that firm and they have no right to take part in its

management or to sue for its dissolution

What constitutes a partnership

A firm is strictly not a person It is an association of persons and the agreement by which a firm purports to



enter into a partnership with an individual or another firm merely makes the partners of that firm individual

partners of the larger partnership A firm as such cannot enter into an agreement as a partner with another

firm or individuals

Therefore when one partnership enters into a partnership agreement with another partnership firm thepartnership is in fact between all the partners of both the firms

The Supreme Court has observed that a partnership agreement creates and defines the relation of partnership

and therefore identifies the firm if that conclusion is correct it is only a further step to hold that eachpartnership agreement may constitute a distinct and separate partnership and therefore a distinct and

separate firm

That is not to say that a firm is a corporate entity or enjoys a juristic personality in that sense The firm name isonly a collective name for the individual partners and each partnership is a distinct relationship The partners

may be different and yet the nature of the business may be the same the business may be different and yet thepartnership may be the same And agreement between partners to carry on a business and to share its profits

may be followed by a separate agreement between the same partners to carry on another business and sharethe profits therein The intention may be to constitute two separate partnerships and two distinct firms or toextend merely the partnership originally constituted to carry on one business or to carrying on another

business It will depend on the intention of the partners The intention of the partners will have to be decidedwith reference to the terms of the agreement and all the surrounding circumstances including evidence as to

interlacing or interlocking of management finance or other incidentals of the respective businesses

In other words the same partners can form two different partnerships The Supreme Court has held that theword lsquopersonrsquo in section 4 of the Partnership Act contemplates only natural or artificial or legal person and a

firm is not a person and as such not entitled to enter into a partnership with another firm or H U F orindividual In this view of the matter there can arise no question of registration of a partnership purporting to

be between three parties viz a firm a HUF and an individual as a firm

A partner in his individual capacity can legally be a partner in a firm and the fact that he has secured his capitalfrom another firm or that he has entered into partnership with other members of that firm in respect of hisshare in the first mentioned firm does not show that the other firm is a partner of the first mentioned firm or

that the latter firm is not validly constituted A divided member or some of the divided members of an

erstwhile joint Hindu family can enter into partnership with a third person but under some arrangement inter-se between other members of the divided family but the partnership will have no concern with the obligations

of such divided members to other members of their family in the partnership and their shares in the partnership

have nothing to do with their shares In the Joint familyrsquos divided properties

Not only that but it has been held that the Karta of a HUF can enter into partnership with an individual

member of that very family provided the member has contributed his own self acquired capital by way of

money or other property to the capital of the firm And the members personal skill and labour is held to be his

property which can be a contribution to the capital of such a firmrsquo Similarly if a benamidar who has thecharacter of a trustee of the real owner enters into partnership with another in his own name the share

allotted to him in the partnership must be held to specify his individual share thereinrsquo Shortly therefore the

position is that partnership can be only between individuals andor any other legal entity and those who are

actually parties to a partnership agreement will be considered as partners irrespective of their personalrelationship with others inter-se and with which the partnerships will not be concerned such as the

beneficiaries if their trustee is a partner or the real owner If his benamidar is a partner or members of a HUF if

their Karta is a partner or the partners of a firm if one of them is a partner of the other firm and so on



Agreement of partnership

As stated above a partnership is constituted by an agreement between the partners The agreement may be in

writing or oral But from the practical point of view and particularly in view of the provisions of other Actssuch as the Income Tax Act as well as Partnership Act an oral partnership is not practicable and

therefore a partnership agreement is necessarily required to be in writing

Therefore the mere fact that two persons as joint owners either as heirs or legatees are carrying on abusiness it does not necessarily mean that they are partners and if they want to carry on the business in

partnership then a Partnership agreement in writing becomes necessary For example if a person dies leaving

a running business and his heirs continue to carry on such business it will not be a business carried on in

partnership and if they want to do so they will have to enter into a regular agreement of partnership

Being an agreement and an agreement enforceable at law such an agreement must fulfill the basic

requirements of a valid contract as required by the Contract Act Therefore a minor or a mentally

handicapped person cannot enter into a partnership agreement though by virtue of the provisions of thePartnership Act a minor can be admitted only to the benefits of the partnership But that only means that a

minor can have a share in the profits of the business but he cannot become a partner and cannot execute any

agreement of partnership

Similarly if a partnership deed provides that on the death of a partner his heirs or any one or more of them

should be admitted as partners or partner in place of the deceased partner even in such a case on the death of

a partner his heirs or any of them do not become partners automatically on such death But a fresh agreementof partnership will have to be executed between the existing partners and the heirs or heir of the deceased

partner and if the heir is a minor the new partnership will stand postponed till the minor attains majority or if

the surviving partners are more than one the minor can only be admitted to the benefits of partnership

Test of partnership

As stated before a partnership agreement can be oral or in writing It is not the general practice to enter into

a preliminary agreement to enter into a regular partnership agreement But if such a preliminary agreement is

entered into and the partners start business in anticipation of executing a formal deed of partnership thepartnership shall be deemed to have commenced from the commencement of the business unless the

preliminary agreement is conditional upon the happening or not happening of some event in which case the

partnership cannot be said to have come into existence unless the event has happened or not happened

Another test of partnership as mentioned above is that of sharing profits and which is an essential requirementof a partnership Profits may be shared in such proportions as the parties may agree but sharing of profits is

most essential As against that sharing of losses only suffered in business is not a test to constitute a

partnership

Therefore the partnership agreement may provide that a particular partner or partners will not be liable to

bear any losses of the firm As regards sharing in profits the agreement may provide that a partner shall

receive only a fixed share in the profits or a fixed periodical amount and It is not necessary that profits shouldbe shared in certain proportions

Section 6 of the Partnership Act provides that In determining whether a group of persons is or is not a firm

or whether a person is or is not a partner in a firm regard shall be had to the real relation between the partiesas shown by all the relevant facts taken together



It further provides that sharing of profits or gross returns arising from property by persons holding joint orcommon interest in that property does not of itself make such persons partners that is as stated above mere

joint ownership of business does not constitute a partnership

Similarly receipt by a person of a share of the profits of a business or a payment contingent upon earning ofprofits or carrying with the profits earned by a business does not of itself make him a partner with the person

carrying on the business For example the receipt of a share or payment by a lender of money to persons

engaged or about to engage in a business does not make such lender a partner

Similarly a share given in profits to a servant or agent as remuneration does not make him a partner or if a

widow or child of a deceased partner is given any annuity in payment of the share of the deceased partner It

does not make the widow or child a partner or if a business is sold with goodwill and the seller is given a

share in profits towards payment of the sale price it will not make him a partner of the firm But otherwisewherever the agreement is for sharing of business carried on by two or more persons the partnership relation

will be inferred

The partnership business may consist of doing anything which is not illegal or against public policy Business

may consist of carrying a continuous trade or profession or any manufacture and any other activity of which

the object is to earn profits Or it may be limited to a single adventure

Partnership for an adventure

Section 8 of the Partnership Act provides that a person may become a partner with another partner In

particular adventure or undertaking

As observed by the Gujarat High Court the common law does not recognise the relationship of co-

adventurers but with the passage of time the judicial decisions have recognised what is known as joint

ventures of two or more persons undertaking to combine their property or labour in context of a particular

line of trade or general business for joint profits The courts do not treat a joint adventure as identical with thepartnership though it is so similar in nature and in the contractual relations created between such adventurers

the rights as between them are governed particularly by the same rules that govern the partnership

This relationship has been defined to be a special combination of persons undertaking jointly some specificadventure for profit without any actual partnership

It is also described as a commercial or maritime enterprise undertaken by several persons jointly a limited

partnership not limited in the statutory sense as to the liabilities of the partners but as to its scope or durationGenerally speaking the distinction between joint venture and partnership is that former relates to a single

transaction though It may comprehend business to be continued over several years while the latter relates to a

joint business of a particular trade In order to constitute a joint venture there must be a community of interestand right tojoint control

It is recognised on authority that each of the partners must have equal voice in the matter of performance and

control over the activities used therein though one authority may entrust the performance to another

The rights and duties and liabilities of a joint venture are similar or analogous to those which govern

corresponding rights and duties and liabilities of the partners The only difference between partnership under

section 8 of the Partnership Act and an ordinary partnership is that ln joint venture parties undertake noliability beyond the limit of a particular ventureadventure or business or undertaking and their rights and

obligations are therefore less extensive than those of the partners in ordinary partnership



Partnership an agency

The third essential of a partnership is that a partnership business actually may be carried on by all the partners

together or by any one or more partners for all and on behalf of the others in which case each partner is an

implied agent of the other partners It is not therefore necessary that all the partners take part in the businessof the partnership firm Some partners can be active partners and others can be sleeping partners But it must

be clear that there is an implied or express agency constituted in favour of one partner by the other partners

If there is no element of agency even if there is any agreement to share profits there will be no partnership

So a partner has a double capacity he is the principal so far as he is concerned and the agent so far as otherpartners are concerned

Period of partnership

A partnership can be for a fixed period of time or it may be limited to a particular adventure as provided in

Section 8 or it may be for a duration at the will of the partners Where the period of the partnership is not

fixed and the partnership is not for a particular adventure then under section 7 of the Act the partnership shallbe deemed to be a partnership at will

Rights and duties of partners

Sections 9 amp 10 of the Act lay down the basic duties of every partner and the said duties are not subject toany contract to the contrary Therefore partners are bound to carry on the business of the firm to the greatest

common advantage to be just and faithful to each other and to render accounts and full information of all

things affecting the firm to any partner or his legal representative and every partner is bound to indemnify the

firm for any loss caused to it by fraud in the conduct of the business of the firm

Subject to this the mutual rights and duties of partners may be decided by contract between the partners

either express or implied

Subject to any contract to the contrary such duties and rights of each partner are provided in Sections12 and

13 of the Partnership Act

They are

every partner has a right to take part in the conduct of the business

every partner is bound to attend diligently to his duties in the conduct of businessany difference arising as to ordinary matters connected with the business may be decided by a majority of

partners and no change in the nature of the business shall be made without the consent of all the partners

every partner has a right to have access to and to inspect and copy any books of the firm

a partner is not entitled to receive remuneration for taking part in the conduct of the business

the partners are entitled to share equally in the profits earned and shall contribute equally to the losses

sustained by the firm

where the partner is entitled to interest on the capital subscribed by him such interest shall be payable onlyout of the profits a partnership making for the purpose of the business any payment or advance beyond the

amount of capital he has agreed to subscribe is entitled to Interest thereon at the rate of 6 per annum

the firm shall indemnify a partner in respect of payments made and liabilities incurred by him

the partner shall indemnify the firm from any loss caused due to his wilful neglect in the conduct of the

business of the firm



These rights and duties will be implied in the partnership unless the partnership agreement provides to the

contrary ie makes any variation in the said rights and duties

Similarly subject to a contract to the contrary if a partner derives any profit for himself from any transaction

of the firm or from the use of the property or business connection with the firm or the firm name he is liable to

account for the profit and pay it to the firm and if the partner carries a business of the same nature as and

competing with that of the firm he shall account for and pay to the firm all profits made by him in that

business

Property of partnership

The property of a partnership firm will consist of all the assets moveable and immoveable brought in by any

or all the partners into the firm and also include the goodwill

As to what is goodwill see Introductory Note to Ch 3 Part III It may be stated that relying upon the specific

provision of s 22 of the English Partnership Act 1890 the Supreme Court has held that all property of a

partnership firm whether moveable or immoveable is moveable property and therefore on retirement of any

partner or dissolution of partnership the division of even immoveable property among the partners does not

amount to transfer of property and the deed of retirement or dissolution does not require registration

The Supreme Court has not considered the law of vesting and divesting of interest in an immoveableproperty A property acquired by A by purchase or otherwise is vested in him and even if A brings that

property into partnership and it is used for the partnership business the property is not automatically divested

from A and vested in A and his other partners

Vesting and divesting can take effect only by act of parties or by operation of law and therefore the

property brought in by A cannot become vested in the other partners unless there is a regular transfer of the

property by A to himself and other partners And similarly if property vested in the partners is divided amongthem it amounts to transfer of one partnerrsquos interest to the other and such transfer is necessary to vest and

divest the title from one to the other

Even in English law in spite of the provisions of Partnership Act above referred to the convincing practice is

to effect the transfer of property brought in or taken out of the partnership by a Deed of Conveyance

Limits on Agency of partners

As stated above every partner is an agent of the other partners and has implied authority to do all acts and

things necessary for the purpose of carrying on business of the firm But such an implied authority does not

empower a partner to

(a) Submit a dispute relating to the business of the firm to arbitration or

(b) open a banking account on behalf of the firm in his own name

(c) compromise or relinquish any claim or a portion of a claim by the firm

(d) withdraw a suit or proceeding on behalf of the firm

(e) admit any liability in a suit or proceeding against the firm



(f) acquire immoveable property on behalf of the firm

(g) transfer any such property or

(h) enter into any partnership on behalf of the firm

These being the implied authorities they can be modified by express provisions in the partnership deed

As stated above the partnership is not a legal entity by itself but only an association of persons and the name

of the firm is only a mode or compendious expression representing the partners However section 22 of theAct provides that in order to bind a firm an act or instrument done or executed by a partner or other person

on behalf of the firm shall be done or executed in the firm name or in any other manner expressing or implying

the Intention to bind the firm This means that in order to bind the firm and all the partners thereof every act

must be done in the name of the firm or expressly on behalf of the Firm Therefore when a contract is entered

into for and on behalf of a partnership firm It is desirable to make the firm by its one or more partners as a

party or one or more partners can be made a party in his or their names but as partners of their firm A mere

description of the signatory that he is partner of a firm may not be sufficient to bind the firm But here a

distinction should be made between an ordinary contract and a deed of transfer of any immoveable propertyIn a case where an immoveable property is to be acquired by purchase or lease or otherwise it is necessary

to make all or some of the partners as parties and not the firm in its name A firm is not a legal person and a

transfer can be only by or in favour of a legal or juridical person as provided in S 5 of the Transfer of

Property Act A partnership firm by its name is not a juristic person like a corporate body It is the partners

who are as a body of persons juristic persons

It is not necessary to deal with the provisions of the Partnership Act contained in sections 20 to 30 asthey are not relevant so far as drafting of a deed of partnership and other incidental documents is concerned

Those provisions are also binding upon any firm as they are not subject to contract to the contrary

Retirement of a partner

Under the Partnership Act no person can be admitted into partnership without

the consent of the other partner or partners unless there is any contract to the

contrary (S 31)

Any partner may with the consent of all the other partners or in terms of the

deed of partnership where the partnership is at will by giving notice in writing to

all other partners to that effect dissolve the partnership or retire from

partnership

A retiring partner however continues to be liable to third parties even If theliability Is taken over by the remaining partners (S32) Therefore in a deed of

retirement it is necessary to provide that In the event of the retiring partner being

held liable by a third party the remaining partners shall indemnify him to that

extent when the liabilities are taken over by the remaining partners

Insolvency of a partner also causes compulsory retirement of an insolvent

partner (S 35) It is therefore generally provided in a deed of partnership

when there are more than two partners that the insolvency of any partner willnot dissolve the partnership If a partner retires unless there is contract to the

contrary the retiring partner cannot use the firm name represent himself as

carrying on the business of the firm or solicit the customers of the Firm (S36)

Therefore in a deed of retirement It is generally not necessary to make explicit



that the retiring partner shall not do any of these things But if he is to berestrained from carrying on similar business for a specified period or in a

specified area such condition can be provided in the deed of retirement and it islegal (S36(2))

Dissolution

The Act also provides that a partnership firm may be dissolved under the following circumstances namely

as a result of any agreement between all the partnersby adjudication of all the partners or all partners but one as insolvent or

by the happening of an event which makes it unlawful for the business of the firm to be carried on in

partnership or

subject to agreement between the parties

efflux of time

completion of the adventure

death of a partner andinsolvency of a partner

In these last four cases the partnership agreement may provide whether the firm will be dissolved or not on

the happening of any of the four events Even if the deed provides that the partnership will not be dissolved on

the death or insolvency of a partner it does not mean that on the death or insolvency of a partner he ceases

to have interest in the partnership property In such case his interest in the partnership property will survive to

his heirs in case of his death and to his assignees in case of insolvency In the absence of a term in the deed of

partnership to that effect it cannot be that the partnership shall continue and notwithstanding the death of apartner it will operate to extinguish his proprietary rights in the assets of the Firm

A partnership can also be dissolved by the Court under the circumstances mentioned in Section 44 of the

Act Where the partnership is lsquoat willrsquo the partnership can be dissolved by any partner or partners giving

notice of histheir intention to dissolve the firm

Types of partnership

The result of this summary of the Act is that a partnership is generally created by agreement between the

partners A partnership can be formed between

one or more Individuals or

between an Individual and a person representing a HUF or

between an Individual and other partner representing his firm or

between two partnership firms or

between a Limited Company or a Corporation and an Individual or partnership firm or

between a partnership and a HUF

between members of HUF in their individual and independent capacitybetween a HUF and a member of that HUF independently

Partnership under Companies Act

Section 4 of the Companies Act 1956 provides that the number of partners in a firm shall not exceed 20



and a partnership having more than 20 persons will be illegal

When there is partnership between two firms all the partners of each firm will he taken into account for the

purpose of this provision but if a partnership is between the Karta or any member of HUF on the one hand

and another individual or Individuals on the other the members of the joint family will not be taken into

account A Hindu Undivided family carrying on business as such not being a partnership S 11 of the

Companies Act will not apply even if the members of that family are more than 20 But where two or moreHindu Undivided families are carrying on business in partnership the number of the members of those families

except minors will be taken into account for the purpose of S 11 of the Companies Act

Partnership under Income Tax Act

A partnership to be recognised for the purpose of income Tax liability of the partners and their firm is

required to comply with certain provisions of the Income Tax Act While therefore drafting a deed of

partnership the provisions of the Act are required to be taken in to account For detail discussion on this

question See Chapter 3 part VIII

Partnership and other bodies of Individuals

A partnership is distinguishable from several other associations or bodies of individuals A partnership is

different from co-owners in several respects The distinguishing features are stated by the Supreme Court in

Champaran Cane Concern Corporation v State of Bihar It is different from a club which is an

association of persons formed for the purpose other than carrying on business and therefore there is no object

to earn profit Partnership is differentfrom a company or any other corporate body which is a legal entity

Partnership is also different from Hindu Joint family firm the latter being a creation of law while the former is acreation of contract It is not necessary to discuss the subject in more detail as each of these bodies are dealt

with separately elsewhere

Registration

A partnership firm is required to he registered under sections 58 and 59 of the Partnership Act though it is

not compulsory

Every change in the constitution of a partnership is also required to be registered But if it is not registered

then there are certain handicaps stated in S69 of the Act

The main handicap being that a partnership firm or its partner cannot file a suit against a third party In

Maharashtra the Section is made more stringent making registration almost compulsory For the purpose of

income tax benefits It is necessary to register a partnership with the Department under S 184 and S185 of

the Income Tax Act 1961 For the Influence of the Income Tax Act on partnership see Ch III in Part

Viii

Limited partnership

The concept of limited partnership is not recognised by Indian Law It is prevalent in England and America

and other countries In England the limited partnership is governed by the Partnership Act of 1907 It

consists of general partners who are the main partners with exclusive right of management and their liability is

unlimited But they can take any linilted partner who contributes some capital to the Firm and whose liability is



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limited to that amount provided he does not participate in the management or withdraw any part of the capital

contributed by him during the term of partnership However a limited partnership is not a separate legal entitylike a limited company Generally a limited partner joins a firm to participate in a particular scheme or

adventure of the firm

Stamp Duty and Registration

Stamp Duty On a Deed of Partnership the stamp duty under the Indian Stamp Act is a fixed one The

same duty is payable on a deed of retirement or a deed of dissolution But in Maharashtra if the deed of

retirement or deed of dissolution effects any transfer of an immoveable property it will attract stamp duty as

on a conveyance on the market value of the property For the law in different States see Ch1 in Part VIII

Registration A partnership deed is not required to be registered even if an immoveable property is brought

in the firm Similarly a deed of retirement or a deed of dissolution is not required to be registered Accordingto Supreme Court a division of even immoveable properties on dissolution is not required to be registered as

it does not amount to a transfer The correctness of this view is doubtful and it is desirable to get such a deed

of dissolution or retirement registered for the sake of caution or safety

Deeds and Agreements

Please refer Document Advisor for morehelliphellip

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Displaying 21 CommentsHave Your Say

1 maddy saysMay 15 2013 at 929 pm

I have a doubt regarding this articlehellip it is not mentioned here that who all can be a part of partnershipfirm say a salaried person of a private ltd can be a partnera sleeping or active

2 pradeep kapoor saysJune 6 2013 at 322 pm

my partner in legal dispute of proving partnership has denied rent receipt given by the owner sayingthat owner never used to give rent receiptEven though the owner has come to the court and given the

evidence saying that she use to give rent receipt in the name of plaintiff and defendant everymonthwhether this evidence (rent receipt)submitted by me will be taken as evidence by court or not

Is there any supreme court citation on this if any kindly forward it to me

Thanks

3 Jastej S (Team Vakilno1) saysJune 7 2013 at 341 pm

If the owner who has deposed regarding rent receipts can also provide with the counterfoils then it willbe more beneficial You can produce other evidence also in this regard

4 Kapil Surindrajit saysJuly 4 2013 at 157 pm

As Stated in your above brief partners cannot draw salary but can they draw some fixed amount fromthe firms monthly earnings( subjected to adjustment ant the time of sharing their annual or periodicalprofits) to meet with their individual routine expenses

5 Cosmas Lawrence says



July 16 2013 at 241 pm

It is a good lesson thanks a lot

6 VIN0D VAID saysOctober 18 2013 at 1232 pm

my question is if there are four partners in a partnership firmthree partners are willing to desolve thepartnership but one partners is not Can partnersip firm be desolved witht the consent of the threepartners

7 Deepak says

November 6 2013 at 117 pm

in case of an unregistered partnership firm Do we need apply for the ldquoNAMErdquo of the partnership firm

If yes How do we apply

8 Bhagwati trivedi says

February 3 2014 at 107 pm

In arbitationawaded that partnership amp firm in the year 1992 dissoluation and close claim of one

partner of income in partnership rejected ( artical 5 time bar period) now can i case for change of firmname or what i do Please gine guidline

9 Jaimin Soni saysFebruary 19 2014 at 806 am

In a partnership firm between twoCan both the partner take the sharing in profit on monthly basis as remuneration

10 rttdrytdtyt saysApril 1 2014 at 327 pm

rtgrthrtyhdrt

11 abhishek rathore says

June 14 2014 at 536 pm

THESE NOTES ARE VERY INTRESTING FOR YOUR PROJECTS

12 kuruvill says

August 4 2014 at 244 pm

A partnership firm ( four members)carrying on the business of real estate and apartment developingpurchased land for building flats represented and signed the deed by two partners only After one year



one partner of the above signatory left A deed of retirement and resolution prepared on rs100 stamppaper duly signed by all four partners including the said retiring parter Later the apartment flats sold to

customers duly registered and signed the deed of sale agreement by one partner (who signed thepurchase deed alongwith the retiring partner) only Is it correct the signature of one partner out of three

is sufficient for selling the flats though his name and signature was recorded in the purchase deed alongwith retiring partner kindly comment on it

13 naveen saysAugust 12 2014 at 911 pm

sir 4 parners and 3 portners cast oc 1 person sc + working partner but 3 partners daminashion in thefirm plz rules sc act or incom tex act plz inform plz save me sir

14 Bhawna saysSeptember 12 2014 at 604 pm

Amar and Poonam have a Partnership Deed for a Petrol Pump with 50-50 partnership The Deed isnot registered but it is on a Rs 50 stamp paper and notarized and attested Is Poonam legallyauthorised to claim the ownership of the pump after Amarrsquos death and can she now get the deed

registered

15 Purshottam Makhija saysOctober 29 2014 at 733 pm

We have registered partnership with 5 partners Now the two partners have intentionally closed theBank account in order to harass other partnersHow we can open again the Bank account in order torun the business smoothly and completion of the agreement to perform the balance contract

16 naresh murjani says


my father gone in a partnership deed with my elder brother on 24-05-2004 but this partnership deeddid not came into exixtence or being impleted originally in business bank accounts and income tax

departments everywhere he was mere a sole proprietor till his death on 712006But then my elder brother used this written unregistered partnership deed and submitted in our local

government office of krishi mandi and showed his partnership in firm before the death of father and itwas mentioned in partnership deed that if one partner dies another will be 100 owner of the firm

Now krishi mandi government official who were corrupt submitted that partnership deed in back dateshowed my brother partner and made him proprietor in the firm after the death of my father and thatswhy now my brother got the two shops attatched with that firm as a owner of firm and shops being

alloted to my father as a proprietor of firm for which my brother is owner right nowwhat should i do what is the legal rights which i should follow to get back the firm to originall situation

back to get shares in firm and shops attatched toit please help

17 Rose says



December 24 2014 at 531 pm

I have registered my partnership deed with 3 partners on 1st October 2014 No business has been

started till today as on 23rd December 2014We all 3 partners want to end the partnership thru mutualconsent

What is the procedure

What is the Format of the sameDo we have to prepare a Deed of Dissolution of the firm and get it registered

please help Its very urgent

18 Rose saysDecember 24 2014 at 535 pm

I have registered my partnership deed with 3 partners(individual persons) on 1st October 2014 No

business has been started till today as on 23rd December 2014We all 3 partners want to end thepartnership thru mutual consent




19 vivek tripathi saysDecember 31 2014 at 251 pm

Please note that HUF cannot be a partner

20 vivek tripathi says


tGeneral Circular No 132013

FNo Ilt32012-cL-VGovernment of India

Ministry of Corporate Affairs5th Floor A Wing Shastri Bhavan

Dr RP Road New Delhi-110 001Dated 29th July2013All the Regional Directors

All the Registrar of Companies Official LiquidatorsAll Stakeholders

Sub Whether Hindu Undivided Familv (HUF) its Karta can becomepartner aesienated Partner (DPl in Limited Liabilitv Partnership (LLP)



Sir

It has come to the notice of the Ministry that some Hindu UndividedFamilies (HUFs) Kartas of such families are applying to become partnerDesignated partner (DP) in LLPs and a question has arisen whether a lsquoHUFrsquo or a

karta can be allowed to do so The matter has been examined in consultationwith Ministry of Law

2 As per section 5 of LLP Act 2008 only an individual or body corporate maybe a partner in a Limited Liability Partnership A HUF cannot be treated as a body

corporate for the purposes of LLP Act 2008 Therefore a HUF or its karta can notbecome designated partner in LLP3 This issues with the approval of Secretary MCA

Yours faCopy to

1 All Concerned2 PS to CAM

3 PPS to Secretary Additional Secretary Joint Secretaries

21 PRIYVRAT SINGH says

January 24 2015 at 1028 am

How to register a firm in up ampplz tell me step by stephellipTHANKS

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Rights and duties of partnersProperty of partnershipLimits on Agency of partnersRetirement of a partnerDissolutionTypes of partnershipPartnership under Companies ActPartnership under Income Tax ActPartnership and other bodies of IndividualsRegistrationLimited partnershipStamp Duty and RegistrationDeeds and Agreements

Definition

A Partnership is defined by the Indian Partnership Act 1932 as lsquothe relation between persons who have

agreed to share profits of the business carried on by all or any of them acting for allrsquo This definition givesthree minimum requirements to constitute a partnership viz (1) there must be an agreement entered into

orally or in writing by the persons who desire to form a partnership (2) the object of the agreement must beto share the profits of business intended to be carried on by the partnership and (3) the business must be

carried on by all the partners or by any of them acting for all of them The term lsquopersonrsquo is not defined by thePartnership Act Section 2(42) of the General Clauses Act defines lsquoa personrsquo to include a company or anassociation or body of individuals whether incorporated or not But the Supreme Court has held that this

definition cannot be imported into the Partnership Act and the lsquopersonrsquo under the Partnership Act meanseither an individual or any other legal entity such as a Limited Company registered under the Companies Act

or any other Corporation constituted by or under any act of the Legislature as a body corporate TheSupreme Court has observed that it is now well settled that Hindu Undivided Family cannot as such enter into

a contract of partnership with another person or persons because it is a fleeting body its composition changesby births and deaths marriages and divorces and such a partnership is likely to have a precarious existence

It therefore follows that a body of individuals such as an unincorporated society cannot as such become apartner in a firm It also follows that a partnership firm cannot as such enter into a partnership with another

individual or legal entity or with any other partnership firm because a partnership as such is not a person Butin the case of HUF the Karta of the family or a member thereof can become partner with another individualor with other legal entity or even with the partners or partner of a partnership firm because in such a case It is

the Karta or the individual member who is the partner for all purposes and not the joint family whom herepresents and the family does not become a partner of the firm It has been held that when two Kartas of

two HUFs enter into a partnership agreement the partnership though popularly known as one between thetwo HUFs in the eye of law it is a partnership between two Kartas and the other members of the two

families do not lsquoipso factorsquo become partners There is nothing to prevent individual members of one H U Ffrom entering into a partnership with the individual members of another HUF and in such a case it is the

partnership between the individual members and it is wholly inappropriate to describe such a partnership asone between two HUFs When the Karta of a HUF enters into a partnership with a stranger the membersof the family do not ipso facto become partners in that firm and they have no right to take part in its

management or to sue for its dissolution

What constitutes a partnership

A firm is strictly not a person It is an association of persons and the agreement by which a firm purports to





firm or individuals




separate firm











































Test of partnership








partnership

















will be inferred













































They are





















business



















































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







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July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






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Imp Links

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firm or individuals




separate firm











































Test of partnership








partnership

















will be inferred













































They are





















business



















































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

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July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement





























Test of partnership








partnership

















will be inferred













































They are





















business



















































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement




















will be inferred













































They are





















business



















































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement































They are





















business



















































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement

















business



















































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement

































contrary (S 31)




partnership















Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement













Dissolution




partnership or


efflux of time














































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement































Registration


not compulsory







Viii

Limited partnership







You might also like

Tweet 0 12















Recommended by

Ads by Google

About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement











You might also like

Tweet 0 12















Recommended by

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About the Author


Related News






41Like












Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement




















Thanks








July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement











July 16 2013 at 241 pm




7 Deepak says











rtgrthrtyhdrt


June 14 2014 at 536 pm


12 kuruvill says












registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






ltstronggt

Submit Comment





Subscribe


Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

Agreement


















registered











17 Rose says



























Sir





Yours faCopy to






Leave a comment






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Visit us on Google+

Recent Posts









Income Tax Act 1961










Imp Links

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Sir





Yours faCopy to






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Income Tax Act 1961










Imp Links

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Subscribe


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Imp Links

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Imp Links

Agreement









how to form a partnership firm

Documents

partnership firmhttp

partnership act meanseither

indian partnership act

intoa contract of partnership

legal entity

thepartnership act

body of individuals

general clauses act