Partnership registration

Dear Sir,

• Partnership Act, 1932 does not provide for compulsory registration of firms. It is optional for partners to set the firm registered and there are no penalties for non-registration.

However, Section 69 of the Act which deals with the effects of non-registration denies certain rights to an unregistered firm. Under the Act :-

• A partner of an unregistered firm cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
• No suits to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
• An unregistered firm or any of its partners cannot claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party.
•  
• Hence, it advisable to get the firm registered sooner or later.
•  
• However, non-registration of a Partnership firm shall not affect:-
•  
• The rights of third parties to sue the firm and/or its partners.

• The firms or partners in the firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which the act does not apply.
• any suit or claim or set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in Section 19 of the Presidency Small Cause Courts Act, 1882 (15 of 1882), or outside the Presidency- towns, is not of a kind specified in the Second Schedule to the Provincial small Cause Courts Act, 1887 (9 of 1887), to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.
• the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm.
• the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner.

In Maharashtra, registration is almost compulsory. For the purpose of income tax benefits It is necessary to register a partnership with the Department under S. 184 and S.185 of the Income Tax Act, 1961. For the Influence of the Income Tax Act on partnership, see Ch. III in Part Viii.

The Department of Registrar of firms has 4 offices in Maharashtra situated at Mumbai, Pune, Nagpur and Aurangabad.

The Address of offices are as follows

1. Registrar of firms, Maharashtra State, Mumbai.
       New Administrative Building, 6th Floor,
       Near Chetna College, Govt. Colony,
       Bandra (East), Mumbai- 400 051.
       Ph No. 022-26551149, 022-26551944.

 2. Assistant Registrar of Firms, Pune.
       Survey No. 47/30, Sarswati Parvati Bhavan,
       2nd Floor, Behind Lokesh Hotel,
       Arnyeshwar Corner, Pune Satara Road,
       Pune-411 009.
       Ph. No. 95250-24221808

 3. Assistant Registrar of Firms, Nagpur.
       118, Old Sachivalay Building,
       Civil Lines, Nagpur-440 001.
       Ph. No. 95712-2530897

 4. Assistant Registrar of Firms, Aurangabad.
       Gadiya Building, House No. 5/1/100,
       Near Divisional Library Office,
       Eknathnagar Road, Usmanpura,
       Aurangabad-431 005.
       Ph. No. 95240-2336798 

Procedure of Registration :

Under Section 58 of the Act, a firm may be registered at any time ( not merely at the time of its formation but subsequently also ) by filing an application with the Registrar of Firms of the area in which any place of business of the firm is situated or proposed to be situated.

• • Application shall contain:-
    • name of the firm
    • place or principal place of business
    • names of any other places where the firm carries on business.
    • date on which each partner joined the firm
    • name in full and permanent address of partners.
    • duration of the firm
  • Application shall be signed and verified by all the partners or their duly authorized agents.
  • Application shall be accompanied by prescribed fee as well as the following documents:
  • Prescribed Registration Form for Incorporation of a Company. (Form No. 1 and Specimen of Affidavit)
  • certified true copy of the Partnership deed entered into.
  • ownership proof of the principal place of business
  • Name of the 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 firms name.
• Under Section 59 of the Act, when the Registrar of Firms is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration.
• penalty for furnishing false particulars (Section 70)

Any person who signs any statement, amending statement, notice or intimation under this Chapter containing any particular which he knows to be false or does not believe to be true or containing particulars which he knows to be incomplete or does not believe to be complete, shall be punishable with imprisonment which may extend to three months, or with a fine or with both.

• Any alterations, subsequent to Registration shall be notified to the registrar:-
  • Change in firm name and principal place of business (Section 60) shall require sending of a new application form along with the prescribed fee, duly signed and verified by all the partners.
  • Change relating to opening and closing of branches. (Section 61)

When a registered firm discontinues business at any place or begins to carry on business at any place, such place not being its principal place of business, any partner or agent of the firm may send intimation thereof to the Registrar.

o    Change in the name and permanent address of any partner (Section 62)

When any partner in a registered firm alters his name or permanent address, an intimation of the alteration may be sent by any partner or agent of the firm to the Registrar

o    Change in the constitution of the firm and its dissolution [Section 63(1)]

when change occurs in the constitution of the firm, any of the new, continuing or the outgoing partner, while when a registered firm is dissolved , any person who was a partner immediately before the dissolution or the agent of any such partner or person specially authorized on his behalf, may give notice of such a change to the Registrar, specifying the date thereof.

• Under Section 63(2), when a minor who has been admitted to the benefits of partnership in a firm attains majority and elects to become or not to become a partner, he or his agent specially authorized in this behalf, may give notice to the Registrar that he has or has not become a partner.
• Accordingly, the various forms prescribed under the Indian Partnership Act, 1932, for the alterations in the registered partnership firm are:-
  
  a. Form No. II :- For change of principle place of business & change in the name of the firm.
  
  b. Form No. III :- For change of the other then principle place of business.
  
  c. Form No. IV :- For change of name of the partners & permanent address of the partners.
  
  d. Form No. V :- For change of constitution of forms & addition or retirement of partner.
  
  e. Form No.VI :- For dissolution of the firm
  
  f. Form No. VII :- For minor partner attains the age of majority.

Regards,

Veeral Gandhi

Well, It was very much informative.. Kindly Tell me the procedure specially the address for Ahmedabad, Gujarat..

Dear Sir,

Procedure has been already included in my previous reply. Below is the address of Registrar of firms situated at Amdavad.

Registrar of Firms

Government of Gujarat
Vechan Vera Bhavan, Ashram Road
Ahmedabad-380 009
Gujarat
Phone : 079- 6581952

Respected Sir,

Sec-184 of Income Tax Act doesnt demand registration.

I think merely a signed deed is enough..

Yes, the underlined Sec. (relating to Sec. 184 & 185), enumerate conditions to be satisfied by a partnership firm in order to claim deduction of Remuneration and interest paid to partners, the basic necessity is for a firm registered or not registered , is to submit deed alongwith the first Income tax return to the IT department.

Ok sir..

Thank You

Dear Sir,

Here is the Sample Partnership deed which you asked for, by sending me a private message. 

Best Regards,

Veeral Gandhi

PARTNERSHIP DEED

THIS DEED of Partnership made at.................. this  .............. day of ...........…...., 2000,  between A, son of O of Ahmedabad Hindu inhabitant, resident of ............................... of the ONE PART, B, son of E of Ahmedabad Hindu inhabitant resident of .............................. of the SECOND PART and Mrs. C, wife of F, of Ahmedabad Hindu inhabitant, resident of     .............................. of the THIRD PART.

WHEREBY IT IS AGREED that the parties hereto (hereinafter together called the partners) shall become partners in the business of ............... for the term of .............. years with effect from ............. upon the terms and conditions hereinafter contained namely:

         (1)       The partnership shall be carried on in the name and style of M/s.

............................................................................

(2)   The partnership business will be carried on at ................ and/or at such other place or places, as shall be agreed to by the partners from time to time.

(3)   The capital of the partnership shall be Rs. ....................  which shall be contributed by the partners in the following proportions.

         First Party 40%                                 Rs . ...................

         Second Party 40%                         Rs . ...................

         Third Party 20%                                Rs . ...................

The further capital if any required by the partnership shall be brought by the partners and such additional capital brought by the partners shall be treated as loan to the firm and shall be paid interest @ ............ % p.a. out of the gross profits of the firm.

(4)   The partners may agree to increase the capital of the firm by bringing in additional contribution in the proportion of the shares held by them in the initial capital of the firm. At the time of increase of the capital, the additional capital of the partner or partners may be adjusted against the increased capital.

(5)   The bankers of the partnership shall be .....................  Branch ................ The bank account of the firm shall be operated upon by any partner.

(6)   The net profits of the business shall be divided between the partners in the proportion of the capital and they shall bear all losses including loss of capital in the same proportion.

(7)     The firm shall maintain usual account and other books at the place of business and they shall be kept properly posted up to date and shall not be removed from the place of business without the consent of all the partners. Each partner shall have free access to the books of account of the partnership at all times and shall be entitled to make such copies or extract therefrom as he may think fit.

(8)     The First and the Second Party shall devote their whole time and attention to the interests of the business and shall be the working partners. They shall be entitled to equal remuneration for their working out of the amount computed in the manner laid down under section 40(b) of the Income-tax Act, 1961. The remuneration so computed shall be worked out and credited in the books of account, at the close of the accounting year period.

         (9)       Each partner shall-

(i) Be just and faithful to other partners in the transactions relating to partnership business;

(ii) Pay his separate debts and indemnify the other partners and assets of the firm against the same and all other proceedings, costs, claims or demands in respect thereof;

(iii) Give full information and truthful explanations of all matters relating to the affairs of the partnership to ail the partners at all times.

             (10)     No partner shall without the consent of the other partners-

              (i)            Engage in any other business directly or indirectly.

(ii) Lend money or give credit of the goods of the firm to whom the other partners have previously forbidden him to trust.

             (iii) Mortgage, charge or assign his share in the assets or profits of the firm.

(iv) Draw, accept or indorse any bill of exchange or promissory note on account of the firm.

             (v) Engage, remove or dismiss any apprentice, employee or agent of the firm.

(vi) Give any security or promise for the payment of money on account of the firm except in the ordinary course of business.

(vii) Give bail, bond or guarantee or become surety for any person or do or knowingly suffer any thing to be done where the partnership property may be endangered.

(viii) Buy, order or contract any property or goods for the firm exceeding Rs. ......................

             (ix) Sign any cheque on behalf of the firm to, a sum exceeding Rs. .............

(x)  Compromise or compound or, release or, discharge any debt due to the partnership.

(11)     The accounts of the partnership shall be maintained according to the financial year, from 1st April to 31st March and general account shall be taken of all the capital assets and liabilities to, the time being of the partnership as on ................. in each year and a balance sheet and profit and loss account shall be prepared by M/s. ....................... Chartered Accountants or any other Chartered Accountants to be agreed upon by the partners and a copy thereof shall be furnished to each of the partners, who shall be bound thereby, unless some manifest error shall be discovered within six months, in which case such error, shall be rectified. Immediately after the preparation of the said balance sheet and profit and loss account, the net profits less sums drawn by the partners shall be divided to the partners.

(12)     Each partner, shall be entitled to ................ weeks holiday in each year and all the partners shall make choice of the holiday alternatively.

(13)     A new partner, may be introduced with the consent of all the partners on such terms and conditions as the partners agree with the Person to be introduced as a partner, in the firm.

(14)     On the death of any partner, during the continuance of the partnership, the firm shall not be dissolved, the surviving partners shall have the option to purchase the share of the deceased partner, in the partnership business and the property and goodwill thereof. The purchase price of the share of deceased partner shall be the amount at which such share shall stand in the last balance sheet which shall have been prepared prior to the death of the deceased or in the event of the death of either, partner before the preparation of the first balance sheet the sum credited to him as his share of capital, and interest at the rate of ............. % p.a. thereon in lie. of profit from the date of the then last preceding annual account up to the date of death of the deceased. The partner, purchasing the share of the deceased partner, shall also enter, into a covenant to indemnify the personal representatives of the deceased partner from the existing and future debts, obligations ant liabilities of the partnership.

(15)     It a partner retires or becomes insolvent, then the partnership will not be dissolved, and the remaining partner, shall have the option to purchase the share of such partner and the purchase price shall be calculated as given in the preceding clause.

(16)     All outgoings and expenses of the partnership and all losses or damages incurred, interest payable for any loans received and taxes, etc. shall be paid first out of the profits, next out of capital and in the case of further deficiency, by the partners in the shares in which they are entitled to the net profits of the partnership business.

(17)     All partnership moneys, bills, notes, cheques and other instruments received by the partnership shall as and when received be paid and deposited in the bank to the credit of the firms' account, except such sums as are immediately required to meet the current expenses of the partnership firm.

(18)     All transactions of the firm shall be done in the name of the partnership and all goods shall be purchased or sold in the firm name. All          the bills, vouchers, delivery notes, receipts, etc. shall be issued in the name of the firm.

(19)     If any partner shall assign, charge or encumber his share in the partnership or shall become bankrupt or a lunatic or otherwise permanently incapable of attending to the partnership business or shall absent himself from the partnership business for more than ............. days, in any period of the twelve months except during his annual holiday without the consent of the other partners, or commit any breach of any of the provisions of this agreement or commits any criminal offence or do or suffer any act which would be a ground for the dissolution of the partnership by the court and in any such case it shall be lawful for the other partners by notice in writing to the offending or incapacitated partner or his trustee or official assignee to determine the partnership whereupon the partnership so far as concerns such partner shall determine and the other partner shall have the option to purchase his share and pay the purchase price to the offending partner or his trustee or official assignee in accordance with clause 14 hereof.

(20) Upon the determination of the partnership by efflux of time or in the case of death, retirement or expulsion of a partner from the partnership, the surviving or other partner shall not exercise the option of purchasing the share and interest of the deceased, retired or expelled partner or the partnership is determined by any other event not herein otherwise provided, a full and general account of the assets, credits, debts, liabilities of the partnership shall be taken and the assets and credits shall be sold, realised and the proceeds shall be applied in paying and discharging debts, liabilities and expenses of and incidental to the partnership business and the winding up affairs of the partnership affairs and subject thereto in paying to each partner any unpaid profits which may be due to him and his share of the capital and the balance of such proceeds shall be divided between the partners in the shares in which they are entitled to the net profits of the partnership and the partners shall execute, do or cooperate in all necessary or proper instruments, acts, matters and things for effecting or facilitating the sale, realisation and getting in of the partnership assets and credits and the application and division of the proceeds thereof and for their mutual release or indemnity or otherwise.

(21) Upon the determination of the partnership, each partner shall have the option to purchase the goodwill of the partnership on a price as agreed to by the partners, and if no partner exercises the option to purchase the goodwill, the same shall be sold to a willing purchaser, PROVIDED THAT it upon any such determination as aforesaid of the partnership, the business thereof shall be sold as a going concern, the goodwill shall be sold along with the business. No partner (unless he is the purchaser of such business) shall directly or indirectly carry on or be concerned or interested in a similar business in his own name in the locality of the firm within a period of     ................... years from the completion of sale of goodwill. The value of the goodwill shall be considered as an asset of the firm and will be added to and form part of the sum payable to all the partners on the dissolution of the partnership.

(22) All disputes and differences whatsoever which shall arise between the partners or between the partners and the personal representatives of the deceased partner relating to any matter whatsoever touching the affairs of the partnership or the interpretation of this agreement and whether before or after the determination of the partnership shall be referred to a single arbitrator, if the parties agree upon one, otherwise to three arbitrators one to be appointed by each party to the difference in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof for the time being in force.

(23) All the other matters for which no provision is made in this deed, shall be decided by the majority of the partners for the time being of the partnership.

IN WITNESS WHEREOF, the parties hereto have hereunto set and subscribed their respective hands the day and year first hereinabove written.

Signed and delivered by the within named A

Signed and delivered by the within named B

Signed and delivered by the within named Smt.C

WITNESSES;

1.

2.

Thank You Sir, Now I am Totally Clear about partnership firm...

I request you to guide me in detail for incorporation of HUF..

Plz give detailed answer for this..

Thank You

Dear Sir,

HUF : Under the Income Tax Act, an HUF is a separate entity for the purpose of income tax return. The same tax slabs are applicable to HUF as to individual assessee.

Eligibility to form an HUF : HUF Formation is automatic with marriage. An HUF is automatically constituted with the marriage of a person. No formal action is required to create an HUF. The HUF being the result of birth, possession of joint property is only an appendage of the HUF and is not necessary for its constitution. So, one person cannot form an HUF.

Whether Registration (In your words, Incorporation) is required ?  There is no need for formal registration for an HUF. If you are eligible to form an HUF you can simply open a bank account , obtain a PAN number and start business in the name of the HUF. There is no need for any agreement between the members as such. However to open the account with a bank and for some other formalities a declaration has to be made, declaring the HUF and the member of the same. 

FORMAT OF HUF CREATION DEED

DECLARATION

I, ________________ son of __________________ Residing at ______________________ aged ___adult do hereby declare-

1. That I am Karta of ___________________________________________ .

2.That I received on behalf of the H U F gift of Rs. ___________ by way of CASH/CHEQUE from my FATHER ___________________________(name of relative of karta of HUF) on dt. _______________ this formed the corpus of the HUF.

3. That the HUF at present is consisting of the followings members- I) Shri _____________________, Adult, Residing at _________________ II) Smt. _____________________, Adult, Residing at _________________ III) Kumari _________________-Minor, Residing at ___________________

4. That the above statements are true to the best of my knowledge & belief. Declare this on _________________

WITNESS: Signature 1. ————————————–

                                     2. ————————————–

Regards,

Veeral Gandhi

Dear sir,

Thank you for sharing excellent information

From:

Mihir Zala

Bcom ACA

Dear Sir,

1. We have made our partnership deed on Rs. 100 /- bond paper and did the business till now. But as I listen currently, the partnership deed should makes on Rs. 500/- bond paper. Is it true ? if yes, what can we do now ? can we make a deed again ?

2. One of our new client asking us Registration no. of our Partnership ferm. We not yet registered our partnership ferm with register. Is it require to register the ferm ? If not, please provide me such section no. which I can show to my client to tell him that it is not neccessary to register the ferm.

Regards,

shashank

Please give model or say formet of partnership deed were in Karta of HUF is partner with other partners. Rajiv Javeri

Dear Sir, First of all I cingratulate for this sight. It is very informative, educativ .Today only I have become member. Well I have asked formet or say model draft pf partnership deed were HUF as Karta is partner along with other. If is is possible please send. Once again thanking Rajiv

Thank you Sir,

That has been one of the best knowledgeable thread, I have come across.

I am benefited.

Thank you,

CA Bhargav Bhatt

Ahmedabad