Dismissing the appeal the Court held that it was an admitted case of the assessee that it had availed of a loan for the purpose of purchase of capital assets in India. The loan was availed of in Indian currency and pursuant to a request made by the assessee, by entering into a contract dated August 4, 2011 with the State Bank of India, the loan in Indian currency was converted into a loan in foreign currency with a view to save interest. This resulted in the premium payable by the assessee on the forward contract. The exchange difference was required to be capitalised because the liability had been incurred by the assessee for the purpose of acquiring fixed assets, namely, plant and machinery. Referred ,  ACIT v. Elecon engineering Co. Ltd. [2010] 322 ITR 20 (SC)  ( AY.2013-14)