A partnership deed provide for the payment of interest on capital but there was loss instead of profit during the year 2010 and 2011 .at what rate will the interest on capital will be allowed.
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A partnership deed is a legal document containing the terms and conditions on which the partnership is based. It is signed by all the partners. Some provisions cannot be carried out ,if the partnership deed is silent regarding the Interest on capital cannot be paid if the partnership deed does not contain any provision regarding that.
Interest on capital can be paid if there is provision regarding it in the partnership deed but only in case of profits.
So,For the year 2010-11, interest on capital cannot be paid to partners.
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