Partnership firm - Interest on capital and depreciation

dear Vitrag

I would like to answer your 2nd question first. 

as far as depreciation on an asset is concerned, it is usage which is important and not ownership. if the building is used only and only by the firm and solely for carrying on the business, the firm can claim depreciation on building. 

again in case of your 3rd question, we can say that executing a Rent/ lease agreement will always be better in such cases. rent will be allowed as expense and Rental income will be added in partner's income

now we come to your first question. 

we cannot treat the personal building of the partner as "deemed capital". what we can do is, we can execute a change to that effect in the partnership deed with due consent of all the partners as to treating the building as Capital Contribution and that the interest should be charged on the opening or closing book value or market value as the case maybe (to be decided by partners) and then interest can be paid as per the deed. because, if remuneration and interest are not mentioned exclusively in the deed, Income Tax Act does not allow it as deduction.

This are of course my personal views, any corrections/ improvements are most welcome

mandar sir is absolutely correct according to section-184 of income tax act

hello,

I hav a doubt regarding interest on capital and interest on drawings.wat is int on drawings and income or expense? and is int on capital income or expense.

sorry i noe it is a small doubt but i am confused.

plz reply.

interest on Capital is a sum by the way of  Interest  paid over capital conrributed by the parter towords business . It is a allowable business expenditure and Interest on drawings is any sum receive from partners by the way of interest  over withdrawl of capital from business. It is a business Income.