Assertion: In case partnership deed is silent, interest on Loan to partner is charged @ 6% p.a. Otherwise, interest on loan is allowed at the agreed rate of interest.
Reasoning: In the absence of Partnership Deed, provisions of the Partnership Act, 1932 apply.
Reasoning: In the absence of Partnership Deed, provisions of the Partnership Act, 1932 apply.
Answer & explanation
Correct answer: option 1
If partnership deed is silent in respect of certain aspects, the relevant provisions of the Indian Partnership Act, 1932 become applicable. According to the Partnership Act, the partners share profits equally, no partner is entitled to remuneration, no interest on capital is allowed and no interest on drawings is charged. However, if any partner has given some loan to the firm, he is entitled to interest on such amount @ 6% per annum. Thus, both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.