Indian Partnership Act 1932
Indian Partnership Act, 1932
The Indian Partnership Act, 1932 is an act passed by Parliament of India to regulate the partnership firms in India. It came in to force on 1st October, 1932. Before the enactment of this act, it was regulated by provisions of Indian Contract Act. The act is managed by Ministry of Corporate Affairs. The term ‘partnership’ under Section 4 of Indian partnership act 1932 is defined as “Partnership is an agreement between two or more persons who have agreed to share profits of the business carried on by all or any one of them acting upon all.”
Partnership is an agreement or voluntary contact between the persons to indulge the business activities. The partners can pull out their capital, labor and skills towards achieving the business goals. It includes business name, financial statement, ratio of profit and time period. Its registration is not mandatory.
The main aim of creating partnership is to carry out business.
The purpose for creation of partnership is mutual sharing of profits.
The minimum number of partners can be two and maximum can be 10.
As there is more than one owner, inflow of capital is enormous which strengthens the financial stability.
Profits from the business do not undergo to second level of taxation.
The registration of the partnership is optional.
The objective of creating partnership is to set up mutually acceptable goals and collaborate each other
• The Section 2 of this act defines as
“Act of a firm” which means any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm.
“Business” includes every trade, occupation and profession.
“Prescribed” means prescribed by rules made under this Act; (c-1) “Registrar” means the Registrar of Firms appointed under sub-section (1) of section 57 and includes the Deputy Registrar of Firms and Assistant Registrar of Firms appointed under sub-section (2) of that section.
“Third party” used in relation to a firm or to a partner therein means any person who is not a partner in the firm.
Expressions used but not defined in this Act and defined in the Indian Contract Act, 1872, shall have the meanings assigned to them in that Act.
• According to Section 58 of the act, a firm can be registered at any time by filling the application with Registrar of Firms.
• For sanction and issue of certificate of registration, Registrar of Firms is responsible under the Section 58 of the Act.
• There is a penalty for false particulars by Section 70.
• Partnership firm is subjected to taxation under Income Tax Act, 1961.