Which of the following will lead to dissolution of partnership firm?

The correct answer is Option (2) → With the consent of all the partners

Note: The given answer is as per the official NTA Answer Key. For this question, Option (3) could also be a possible answer, as explained below.

A firm is dissolved when the business itself is closed. Dissolution by agreement needs no court and no special event: all the partners agree to close the firm. Admission, retirement and death normally change only the partnership (the agreement between the partners), and the firm carries on with new terms.

• Option (1) Admission of a partner — Incorrect. A new partner joins a running business; the old partnership ends but the firm continues.

• Option (2) With the consent of all the partners — Correct. This is dissolution by agreement: when all the partners consent, the firm is closed.

• Option (3) Death of a partner — Should also be correct, though not the answer given by NTA. Subject to a contract between the partners, the firm is dissolved on the death of a partner. Where the partners have agreed to continue, as is usual, the death only reconstitutes the firm.

• Option (4) Retirement of a partner — Incorrect. The remaining partners carry on the business, so it is a reconstitution of the firm.