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Partnership Deed

niki_1079 (CA Practice ) (279 Points)

02 January 2009

I have to prepare a partnership deed of Motorparts business. Can any body pls guide me how to do that. Thanx in advance.

Neha Jain

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4 Replies

CA SUDHIR HALAKHANDI (PRACTICING CHARTERED ACCOUNTANT) (13196 Points)
Replied 02 January 2009

Dear Member,

I am giving herewith the draft of a partnership assuming that there are two partners having 50-50 share and also both are working partners and will be allowed remuneration in equal share.

-With wishes

(CA SUDHIR HALAKHANDI)

PARTNERSHIP DEED

THIS DEED of partnership is made at ______________ this _____ day of ______2009 by & between the following: -

1. SHRI _______________ S/O ________________________, aged about ____ Years, resident of _____________ hereinafter referred to as FIRST PARTNER;

2. SHRI _____________ S/O _________________, aged about ___ Years, resident of ___________ hereinafter referred to as SECOND PARTNER.

BOTH OF THEM COLLECTIVELLY REFERRED TO AS PARTNERS.

WHEREAS on ___________ DAY of ___________ 2009 both the parties to this deed have decided to start business in partnership under the name and style of M/S ______________________.

AND WHEREAS the parties to this deed in order to avoid any dispute or misunderstanding in future deem it expendient to record the terms and conditions on a proper stamp, it is hereby agreed and declared that the following shall be the terms and conditions governing the said business of the partnership: -

1. NAME OF BUSINESS

The business of the firm shall be run under the name and style of M/S _______________. The partners may be their mutual consent carry on business in any other name or names.

2. PLACE OF BUSINESS

The principleplace of business of the firm shall be situated at in _________. The partners may be their mutual consent carry on business at any other place or places.

3. NATURE OF BUSINESS

The main business of the firm shall be Trading of all types of Motor Parts. The partners may by their mutual consent carry on any other type of trade or trades.

4. ACT OF PARTNER

The partners shall look after the business of the firm honestly, diligently, faithfully to the best interest of the firm and to their best of ability.

5. BANKING OPERATIONS

The partners shall be entitled to take loans, grant receipts, draw and endorse negotiable instruments, open and operate bank accounts with the signatures of any one of the partners of the firm.

6. INTEREST ON CAPITAL

The interest @ 12 % P.A. or as may be prescribed under section 40(b) (iv) of the Income Tax Act. 1961 or any other law applicable with reference to the assessment of firms for the relevant accounting period or at a lower rate as may be agreed to by and between the partners from time to time shall paid or credited to the partners on the amount outstanding to the credit of their capital account. Such interest shall be considered as an expenditure of the firm and shall be debited to the profit and loss account of the firm before arriving the profit and/or loss of the firm.

7. REMUNERATION TO THE PARTNERS

That both the partners’ viz. SHRI _____________________ andSHRI ______________ have agreed to keep themselves actively engaged in conducting the affairs of the business of the firm. Both of them shall be working partners of the firm. It is hereby agreed that in consideration of the said partners keeping themselves actively engaged in

the business of the firm and working as the working partners shall be entitled to remuneration. The remuneration payable to the said working partners shall be computed in the manner laid down in the section 40(b) of the Income Tax Act. 1961 as the percentage of the book profit as mentioned below. For the purpose of this clause the book profit as mentioned below. For the purpose of this clause the book profit have the same meaning as given in the explanation 3 to the section 40(b) of the Income Tax Act. 1961 as the percentage of the book profit have the same meaning as given in the explanation 3 to the section 40(b) of the Income Tax Act. 1961. The proportion of the remuneration payable to each working partner shall calculate as under: -

DESCRIPTION	FIRST PARTNER	SECOND PARTNER
(A). In the case of book profit Up to Rs. 50000.00	50 PERCENT	50 PERCENT
(B). In the case of book profit Over: -
i. Up to 75000/. Book profit	45 PERCENT	45 PERCENT
ii. On next 75000/. Book profit	30 PERCENT	30 PERCENT
iii. On the balance of book profit	20 PERCENT	20 PERCENT

9. PROFIT SHARING RATIO

That the net profit and/or loss of the partnership business as per the accounts maintained by the partnership firm after deducting all the expenditures relating to the business of the partnership including the interest and remuneration payable to the partners in accordance with this deed of the partnership or any other supplement deed as may be executed by the partners shall be divided and shared by the partners in following proportions: -

NAME OF PARTNER	PROFIT SHARING RATIO
SHRI FIRST PARTNER	50 PERCENT
SHRI SECOND PARTNER	50 PERCENT

10. ACCOUNTING YEAR

The partnership shall be deemed to have commenced w.e.f. _____________2009and it’s first accounting year shall be closed on 31^ST. MARCH 2009 and thereafter on 31^ST. MARCH every year.

11. CONTINUATION OF PARTNERSHIP FIRM

That not withstanding anything contained in the Indian partnership Act is is hereby mutually agreed to be and between the parties that in case of death of any one partner the firm shall not be dissolved but shall continue to be carried on by and between the surviving partner by legal heirs and/or representatives of the deceased partner as continuing concern on the same terms and conditions as incorporated in this deed or such

terms and conditions as may be agreed to by and between them from time to time. It is hereby further clarified that it shall be deemed as change in constitution and not sucession.

12.TERM OF PARTNERSHIP

The duration of partnership shall be “AT WILL” but the retiring partner shall have to give one month’s notice to the other partner of his intention to retire.

13. AMENDMENDS AND ALTERATIONS

The partner may be their mutual consent modify, add or delete any terms and conditions of the partnership hereinabove mentioned.

14. ARBITRATION

In case any dispute or misunderstanding arises between the partners inter se with regard to any thing relating to the business of the partnership the same shall be referred to arbitration and the same shall be decided and settled as per the terms and provisions of the Indian Arbitration Act. In force from time to time.

IN WITNESS WHEREOF the parties to this deed have set their hands and seals on the day, month and year hereinabove mentioned and in the presence of the witnesses:-

WITNESSES PARTENRS

1. _________________ ________________________

(FIRST PARTNER)

2. _________________ _________________________

(SECOND PARTNER)