Assertion (A): In the absence of Partnership Deed, interest on loan by partner is not allowed. Reason (R): Ganesh, a partner in the firm, gave a loan of ₹ 10,00,000 to the firm without an agreement as to the rate of interest. Interest on loans by Ganesh will be allowed @ 6% p.a. In the context of the above two statements, which of the following is correct?

Question

KollegeApply · Accepted Answer

Only (R) is correct. Explanation: According to the Indian Partnership Act, in the absence of a partnership deed, a partner who gives a loan to the firm is entitled to interest at 6% per annum, even if no rate is agreed upon. Hence, the statement in the assertion is wrong because interest is allowed. The reason is correct, as Ganesh will indeed receive interest @ 6% p.a. Therefore, only (R) is correct.

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