Choose the correct statement if a partnership deed does not exist.

When a partnership deed does not exist or is silent on certain matters, the provisions of the Indian Partnership Act, 1932 apply automatically.

As per the Partnership Act, 1932, in the absence of a partnership deed:

No interest on capital is allowed to partners → Option 1 is incorrect

No interest on drawings is charged from partners → Option 2 is incorrect

No salary or remuneration is given to partners → Option 3 is incorrect

Profits and losses are shared equally among all partners → Option 4 is correct

The logic behind equal profit sharing is based on Section 13(b) of the Partnership Act, 1932. The law assumes that in the absence of any specific agreement, all partners have contributed equally to the business and hence should share profits equally, irrespective of their capital contributions.

For example, if there are three partners A, B, and C without a deed, they will share profits in the ratio 1:1:1, meaning each gets one-third of the profit or bears one-third of the loss.

It's important to note that while interest on capital/drawings and salary are not automatic, partners can always agree to these terms by creating a partnership deed. However, without such a deed, only the statutory provisions apply.