Partnership firm - Interest on capital and depreciation

CA Vitrag S Modi (Chartered Accountant) (186 Points)

25 December 2010  

Dear Friends,

I am citing a case, please give me whether the following is possible.

A Partnership firm has 6 partners. They are using the Building of one of the partners (Personal asset) for carrying their business. 

My Questions are:
1. Can we charge "Interest on Capital" treating the Asset as CAPITAL CONTRIBUTION.

2. Can we charge Depreciation on that Asset?


3. Can we consider it as an Asset on rental basis by executing a deed between the partner and firm whereby the former agrees to give the asset on rental basis to the firm for business purpose.
If the above is true, whether the rent expense is allowed under IT ACT? And the rent income can be treated as Rent Income under HOUSE PROPERTY for the partner?

Thanks in Advance..