6. 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.
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