Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

Identify the section of the Indian Partnership Act, 1932, that states…

Identify the section of the Indian Partnership Act, 1932, that states that the outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money.

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Section 37

Under Section 37 of the Indian Partnership Act, 1932, when the outgoing partner’s amount is not paid at once, he may choose either interest at 6% p.a. or the share of profits earned with his money.

NCERT (2026-27 edition):
Disposal of Amount Due to Retiring Partner – “… In the absence of any agreement, Section 37 of the Indian Partnership Act, 1932 is applicable, which states that the outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e., based on capital ratio).”