Partnership is the relation between persons who have agreed to share profits of the business carried on by all or any one of them acting for all.A Partnership is an association of two or more individuals who agree to share the profits of a lawful business which is managed or carried by them. Partnership is the relation between persons competing to make contract who agrees to carry on a lawful business in commonwith a view of private gain.
A COMPANY PROFILE
A well known garment company XYZ, start a new product for youngsters. When they launch the product the active partner Mr. Nadim admitted his minor son Mr. Salman to the benefits of the partnership. Mr. Salman reaches his majority after 6 months and elected to remain a partner of the firm. XYZ company makes a fresh partnership deed and implement with all legal requirements.
After One week of partnership deed, the company lost Mr. Salman in a road accident and they lost a partner. All the accounts of the company were closedat the end of the year and the income-tax officer calculated all the Profits betweenthe partners and also the tax to be paid by everyone.
1. Give some solid reasons that why the father’ is liable to pay tax on the income of his minor son. (10)
A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership.
In our scenario MR sulman become a partner after six month with majority.
So in partnership all partner liability is unlimited. So after dissolution of the partnership profit or loss will charge from his personal property. this is the main reason that his father is responsible for paying his profit income tax because he receive all profit of his minor son
2. What are the possible conditions for the existence of a “Partnership Agreement”. Explain in your own words. (10)
In order to function well of a firm, there must be some important Conditions for the existence of a “Partnership Agreement”, some of them are given below.
1. Felt of Need
2. Willingness for the use of Money / Asset
3. Willingness for the use of intellectual power
4. Number of Persons
5. Applicable law
6. Duration and effective date
7. Intent for Sharing of Profits
8. Carrying out Business Activities
9. Mutual Rights and Obligations
10. Characteristics of Firm
DOWNLOAD SOLUTION HERE