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PARTNERSHIP FIRM IN INDIA

PARTNERSHIP FIRM IN INDIA

PARTNERSHOP

PARTNERSHIP FIRM IN INDIA

1. Definition.
A Partnership is defined by the Indian Partnership Act, 1932, as ‘the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all’. This definition gives three 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 be to 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.

PARTNERSHIP FIRM IN INDIA

2. 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, the partnership 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 each partnership agreement may constitute a distinct and separate partnership and, therefore, a distinct and separate firm.

PARTNERSHIP FIRM IN INDIA

3. Registration Procedure:
A partnership firm can be registered whether at the time of its formation or even subsequently. You need to file an application with the Registrar of Firms of the area in which your business is located.

• Application for partnership registration should include the following information:
– Name of your firm
– Name of the place where business is carried on
– Names of any other place where business is carried on
– Date of partners joining the firm
– Full name and permanent address of partners.
– Duration of the firm
• Every partner needs to verify and sign the application
• Ensure that the following documents and prescribed fees are enclosed with the registration application :
– Application for Registration in the prescribed Form – I
– Duly filled Specimen of Affidavit
– Certified copy of the Partnership deed
– Proof of ownership of the place of business or the rental/lease agreement thereof
It may be noted here that the name of your partnership firm should not “contain any words which may express or imply the approval or patronage of the government except where the government has given its written consent for the use of such words as part of the firm’s name”.
Once the Registrar of Firms is satisfied that the application procedure has been duly complied with, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration

PARTNERSHIP FIRM IN INDIA

4. 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 the liability Is taken over by the remaining partners (S.32). 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 will not 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. (S.36).
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 be restrained 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 is legal (S.36(2)).

PARTNERSHIP FIRM IN INDIA

5. 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 partners
– by 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, and
– insolvency 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 a partner 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 ‘at will’ the partnership can be dissolved by any partner or partners giving notice of his/their intention to dissolve the firm.

PARTNERSHIP FIRM IN INDIA

6. 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 H.U.F. 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 H.U.F.
– between members of HUF in their individual and independent capacity
– between a HUF and a member of that HUF independently.

PARTNERSHIP FIRM IN INDIA

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PARTNERSHIP FIRM IN INDIA

PARTNERSHIP FIRM IN INDIA

PARTNERSHIP FIRM IN INDIA

PARTNERSHIP FIRM IN INDIA

PARTNERSHIP FIRM IN INDIA

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