Choose the correct statement if a partnership deed does not exist.

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Partners shall share the profit and losses equally

Where there is no partnership deed, the Indian Partnership Act, 1932 fills the gap. It gives the partners only what the Act itself provides, and the profit sharing rule it lays down is equal sharing, irrespective of the capital each has put in.

Why the other options are incorrect

Option (1) Interest on Capital are allowed — Incorrect. No interest on capital is payable unless the partners have agreed to it.
Option (2) Interest on partner drawing is charged — Incorrect. No interest is charged on drawings without an agreement.
Option (3) Remuneration or salary is given to partners — Incorrect. A partner gets no salary for taking part in the business unless the partners have agreed to it.

No deed, no perks: equal shares, and that is the whole package. The one thing the Act does give without a deed is interest at 6% p.a. on a loan a partner advances to the firm.

NCERT (2026-27 edition):
Provisions of Partnership Act Relevant for Accounting – “… (a) Profit Sharing Ratio: If the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared equally by partners, irrespective of their capital contribution in the firm. (b) Interest on Capital: No partner is entitled to claim any interest on the amount of capital contributed by him in the firm as a matter of right. However, interest can be allowed when it is expressly agreed to by the partners. Thus, no interest on capital is payable if the partnership deed is silent on the issue. (c) Interest on Drawings: No interest is to be charged on the drawings made by the partners, if there is no mention in the Deed.”

NCERT (2026-27 edition):
Provisions of Partnership Act Relevant for Accounting – “… (e) Remuneration for Firm’s Work: No partner is entitled to get salary or other remuneration for taking part in the conduct of the business of the firm unless there is a provision for the same in the Partnership Deed.”