T.S. Grewal Class 12 Chapter 1 Q.4 - Accounting for Partnership Firm Fundamentals

Question 4

Barun, Tarun and Shivam are partners without a Partnership Deed. State how the following disputes will be resolved:

1. Barun introduced additional capital of ₹1,00,000 and claims interest @ 10% p.a.
2. Tarun wants to admit his son into the partnership, but Barun and Shivam do not agree.
3. Shivam advanced a loan of ₹50,000 to the firm and claims interest @ 12% p.a.
4. Barun withdrew ₹20,000 during the year; Tarun and Shivam want interest on drawings @ 10% p.a. to be charged.

Solution

In the absence of a Partnership Deed, the provisions of the Indian Partnership Act, 1932 apply:

Issue	Resolution
(a) Interest on additional capital @ 10%	Not allowed – no interest on capital is given without an agreement.
(b) Admission of Tarun’s son	Cannot be admitted – admission needs the consent of all partners, and Barun and Shivam disagree.
(c) Interest on Shivam’s loan @ 12%	Allowed @ 6% p.a. only – the Act provides interest on a partner’s loan @ 6% p.a. even without an agreement.
(d) Interest on Barun’s drawings @ 10%	Not charged – no interest on drawings is charged without an agreement.