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Partnership can be for a fixed period or limited to particular event as provided in section 8. Where period of partnership is not specified, it is deemed as partnership at will.

“Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

The term “person” is not defined by Indian partnership Act, 1932. Apex court held that “Person” under Indian partnership Act means either any individual or any other legal entity or any other corporation constituted by or under any act of legislature as body corporate. HUF being fleeting body cannot enter into contract of partnership with another person

The liability of partners is unlimited and partners are liable for partnership debt unless there are implied or express restrictions. A firm cannot enter into an agreement with other individual or firm.

A partnership agreement and changes there in are required to be registered under section 58 and 59 of the Partnership Act, though it is not compulsory. However there are consequences of non registration which is specified in section 69 such as partner cannot file suit against third party.

Following documents are required for registration of partnership-

• Form No 1
• Affidavit
• Attested copy of partnership deed
• Ownership proof

Partnership deed, deed of retirement and deed of dissolution is not required to be registered under Indian Registration Act, 1908 even if an immovable property brought in the firm. However such immovable property shall be purchased in the name of all partners becoming party to sale deed and such sale deed is required to be registered under Registration Act, 1908 with Registrar or Sub- registrar.

A partnership can be formed between

• one or more individual
• An Individual and person representing HUF
• An Individual and other partner representing Firm
• Two partnership firm or between two LLP
• Partnership and HUF
• Members of HUF
• HUF and a member of HUF

Section 464 of Companies Act, 2013 has prescribed the limit of maximum number partners as 50.

For the purpose of availing benefit of Income Tax Act, 1961, Firm is required to file certified copy of instrument of partnership along with income tax return of the firm for the previous year relevant to assessment year in respect of which assessment of the firm is first sought.

The copy of Instrument must be certified by all the partners. In the event of change in share of partnership firm, certified copy of revised instrument is required to accompany the return.

• Interest to Partners- Deduction shall be allowed up to Interest payable to partners in accordance with the term of partnership deed which shall not exceed 12% p.a.
• Remuneration to Partners- Deduction shall be allowed up to remuneration payable to partners in accordance with the term of partnership deed which shall not exceed the following limits-

On first 3 lakhs of Book profit or in case of loss = Rs. 150000 or 90% of Book profit, whichever is more

On balance of book profit = 60% of Book Profit.

On deed of Partnership e-stamp duty is paid under schedule 1 to Indian Stamp Act, 1899 and on Deed of Retirement and Deed of Dissolution stamp duty or e-stamp duty is paid.