Int on Capital in absence of any clause in deed

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A partnership firm with two partners is seeking advice on whether they can pay interest on capital to one partner who contributed significantly more, even though there's no specific clause in their partnership deed. The partners have a mutual understanding to do so due to low profits in the firm's first year. However, the general consensus is that without a deed clause, such interest cannot be legally withdrawn.

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(Querist)
02 July 2020 We are a partnership firm of two partners. One partner has contributed more than 3/4th capital. In absence of any clause in partnership deed regarding interest on capital, can we give interest on capital to only one partner who has contributed most. This is will be as per mutual understanding of both partners, since profit of firm is very less , it being first year of the firm. Please advise. Thanks in advance
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CA Ankith Jain

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CA Ankith Jain (Expert)
03 July 2020 As there is no specific mention in the deed about the interest on capital, hence you cannot withdraw the same.
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Monika

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Monika (Querist)
22 July 2020 Sir if there is a clause in partnership deed of Interest on Capital of maximum of 12%, Is it mandatory to withdraw interest on capital ?
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CA Ankith Jain

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CA Ankith Jain (Expert)
25 July 2020 No it is not mandatory.


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