SIMPLE DEED OF PARTNERSHIP
THIS DEED OF PARTNERSHIP is executed on this _____ day of __________ between:
a. Sh.________________ ,s/o Sh. __________________, r/o of _________________________, hereinafter referred to as the "First Party" and
b. Sh.________________ ,s/o Sh. __________________, r/o of _________________________, hereinafter referred to as the "Second Party" and
c. Sh.________________ ,s/o Sh. __________________, r/o of _________________________, hereinafter referred to as the "Third Party" and
The Party of the First Part, Second Part and the Third Part hereinafter collectively referred to as the "Parties".
WHEREAS all the Parties are desirous of joining hands to carry on the business of ________________________ in Partnership, it has been mutually decided to reduce into writing the terms and conditions of the Partnership.
NOW THIS DEED OF PARTNERSHIP WITNESSETH AS UNDER:
That the business of the Partnership shall be carried on under the name and style of ____________________.
2. Term of Partnership
That the Partnership shall be deemed to have commenced from _____________ and shall continue unless otherwise determined by the Parties.
3. Place of Carrying Business
That the business of Partnership shall be carried from ________________________ or any other place as may be agreed upon by the Parties.
4. Profit Sharing Ratio
That irrespective of capital investment, profits or losses of Partnership (including losses of capital nature, if any) shall be divided amongst and borne by the Parties as under:
First Party 33 1/3%
Second Party 33 1/3%
Third Party 33 1/3%
(It has been assumed that the partnership is an equal partnership)
5. Capital Contribution & Interest on Capital
That the necessary capital as well as further funds required for the purpose of Partnership business shall be contributed or arranged by the Parties in such manner as may be mutually agreed upon by and between the Parties from time to time. Interest at the rate of ____ percent per annum or as may be prescribed under Section 40 (b) of the Income Tax Act, 1961 or any other applicable provisions as may be in force under the Income tax assessment of Partnership firm for the relevant accounting period shall be payable to the Parties on account standing to the credit of the account of the Parties. Such interest shall be calculated and credited to the account of each partner at the close of each accounting year. However, in case of loss or lower income, rate of interest can be nil or lower than ____ percent as may be agreed upon by and between the Parties from time to time.
That all the Parties shall be working partner in the firm. It is hereby agreed that in consideration of the Parties working in the Partnership they will be entitled to remuneration as under: -
a. The remuneration to the partners shall be calculated at the percentage of income for each accounting year in the following manner:
1. In respect of income upto Rs. 1,00,000/-
30% or Rs. 16,333, whichever is more
30% or Rs. 16,333, whichever is more
30% or Rs. 16,333, whichever is more
2. In respect of next Rs. 1,00,000
3. In respect of the balance
(The remuneration here in above has been fixed assuming equal partnership among partners and keeping in view the provisions of the Income Tax Act, 1961. The same may, however, vary depending upon understanding between the parties)
b. For the purpose of above calculation "Income" other than capital gain on long term capital assets shall be computed as defined under explanation 3 to section 40(b) of the Income Tax Act, 1961 or any other applicable provision as may be in force for the Income Tax assessment of the Partnership firm for the relevant accounting year.
c. The Parties will not be entitled to draw any remuneration in the accounting period in which the Partnership firm has suffered loss on the basis of the Income as computed under the provisions of the Income Tax Act, 1961 referred to in (a) above.
d. The remuneration payable to the Parties shall be credited to their account at the close of the accounting period when final accounts of the Partnership are made up and the amount of the remuneration shall fall due to them as determined in the above manner.
e. The Parties shall be entitled to draw remuneration at the end of the relevant accounting year. However, nothing herein contained shall preclude the Parties from withdrawing any amount from the Partnership firm against the amount standing to their capital and/or current or loan account or their shares of profit for the relevant accounting year in such manner as may be determined by mutual consent of the Parties.
f. The Parties shall be entitled to increase or reduce the above remuneration and may also agree to revise the mode of calculating the above-said remuneration as may be agreed upon from time to time by and between the parties.
7. Maintenance of Accounts
That regular books of accounts shall be maintained during the course of the business and these shall be closed on the 31st March each year and shall be opened to inspection of the parties to this deed at all reasonable hours at the Principal place of business.
8. Operation of Bank Accounts
That the bank account(s) of the firm will be operated by the Parties jointly or any two of them jointly.
9. Partners to work in the interests of Partnership
That all the Parties to this Deed shall work honestly, diligently and shall devote their whole time and attention to the business of the firm and shall do nothing to harm the interests of the Partnership.
10. Partners not to do certain Acts
Neither partner shall, without the consent of all other partners
(a) Engage or be concerned or interested in any other business or occupation either directly or indirectly;
(b) Take any apprentice or hire or dismiss any agent or servant of the firm;
(c) Lend any of the moneys or deliver, upon credit, any of the goods of the firm to any person or persons whom the other partner shall have previously in writing forbidden him to trust;
(d) Except in the ordinary course of business give any security or promise for the payment of money on account of the firm;
(e) Draw or accept or endorse any bill of exchange or promissory note on account of the firm;
(f) Remit the whole or any part of any debt or sum due to the firm;
12. Discharge of Personal debts
That the Parties shall punctually pay and discharge their personal debts and liabilities.
13. Dissolution of Partnership
(a) That the Partnership is at will and may be dissolved at any time mutually or by giving one month notice in writing by the outgoing party to the others. In the event of death of a partner, the Partnership shall continue with the nominee/ legal heir of such Partner, joining the firm.
(b) That in the case of dissolution of the firm the net realization on the sale of assets shall be distributed amongst the Parties equally after meeting the liabilities of the firm.
14. Arbitration Clause
Every dispute or difference arising between the partners as to the interpretation, operation, or effect of any clause in the partnership which cannot be mutually resolved, shall be referred to the arbitration of ________________(name of the Arbitrator) failing him, to any other arbitrator chosen by the partners in writing. The decision of such an arbitrator shall be binding on the partners. Subject as aforesaid the Arbitration and Conciliation Act, 1996 and the rules made thereunder shall apply to the arbitration proceedings under this clause.
15. Governing Law
Except as aforesaid, the Partnership shall further abide by the provisions of the Indian Partnership Act, 1932.
IN WITNESS WHEREOF,the parties have set their hands this _________ day of __________.