• 0120-4312039

  • brightbooks@yahoo.com

Section6 MODE OF DETERMINING EXISTENCE OF PARTNERSHIP.

 

In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together.

Explanation I : The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.

Explanation II : The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not itself make him a partner with the persons carrying on the business; and, in particular, the receipt of such share or payment -

  (a) by a lender of money to persons engaged or about to engage in any business

  (b) by a servant or agent as remuneration,

  (c) by the widow or child of a deceased partner, as annuity, or

  (d) by a previous owner or part-owner of the business, as consideration for the sale of the goodwill or share thereof, does not of itself make the receiver a partner with the persons carrying on the business.