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Ruchika and Surekha entered into partnership with capitals of Rs. 30,00.000 and Rs. 15,00,000 respectively. They did not enter into partnership deed. At the end of accounting year, Ruchika claimed interest on capital @6% p.a. but Surekha convinced Ruchika that interest cannot be allowed on capital. Explain how Surekha would have convinced Ruchika?

SOLUTION

Surekha would have given the argument that in case Partnership Deed does not exist, Partnership Act, 1932 prevails, as per which interest is not allowed on capitals.

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