Multiple Input Multiple Output(MIMO) has been remained in much importance in recent past because of high capacity gain over a single antenna system. In this article, analysis over the capacity of the MIMO channel systems with spatial channel has been considered when the channel state information(CSI) is considered imperfect or partial. The dynamic CSI model has also been tried consisting channel mean and covariance which leads to the extracting of channel estimates and error covariance. Both parameters indicated the CSI quality since these are the functions of temporal correlation factor, and based on this, the model covers data from perfect to statistical CSI, either partial or full blind. It is found that in the case of partial & imperfect CSI, the capacity depends on the statistical properties of the error in the CSI. Based on the knowledge of statistical distribution of the deviations in CSI knowledge, a new estimation approach which maximizes a capacity of spatial channel model has been tried. The interference then interactively reduced by employing the iterative channel estimation and data detection approach.