Question

In case there is no partnership deed between the partners, then at what rate interest on capital will be provided?

• A. 8 % p.a
• B. 6% p.a
• C. 12% p.a
• D. No interest on capital will be provided.

Hint:

Without a partnership deed, capital gets no interest by default. Only a partner's loan gets 6% p.a.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
A partnership deed is the written agreement that sets out the terms of the firm. Interest on capital, salary and similar items are allowed only if the deed says so. When there is no deed, the Indian Partnership Act, 1932 fills the gaps with default rules.

Step 2: Key Rule:
Under the default rules, no interest is allowed on the capital of partners. Interest on capital is a matter of agreement, not a right.
By contrast, interest on a partner's loan to the firm is allowed at 6% p.a. even without a deed.

Step 3: Check option (1).:
8% p.a is the usual rate given in questions when the deed allows interest. Without a deed it is not allowed. So (1) is wrong.

Step 4: Check option (2).:
6% p.a is the default rate on a partner's loan, not on capital. So (2) is wrong.

Step 5: Check option (3).:
12% p.a is not a default rate in the Act. So (3) is wrong.

Step 6: Check option (4).:
With no deed, no interest on capital is provided. So (4) is correct.

Final Answer:
No interest on capital is provided when there is no deed. Option (4). \[ \boxed{4} \]