Under Section 4 of the Indian Partnership Act, 1932, the essential test of a partnership is the existence of:

Under Section 4 of the Indian Partnership Act, 1932, partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The true test of partnership is mutual agency: every partner is both an agent and a principal, so that the act of one partner binds the others. Sharing of profits alone is not conclusive, because Section 6 requires the court to ask whether mutual agency exists rather than merely whether profits are shared. Registration is voluntary and is not an ingredient of the relation, and joint ownership of business property does not by itself create a partnership. A common surname or firm name is only evidence of a firm, not its essence.