The true test of partnership within the meaning of section 4 of the Indian Partnership Act, 1932 is -

Section 4 of the Indian Partnership Act, 1932 defines partnership as 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, and the essence of that relation is mutual agency, namely that each partner is both an agent and a principal of the others. Section 6 expressly states that the sharing of profits is prima facie evidence of partnership but is not of itself conclusive, so profit-sharing alone cannot be the test. Joint ownership, a common name and registration are merely indicia that may accompany a partnership, and registration under section 58 is optional, its absence being penalised only in limited ways by section 69. Mutual agency is therefore the decisive test of partnership.