Dominant test- commercial purpose

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Mere fact that Opposite Party is a real estate company does not mean that flat was purchased for commercial purpose[1]




Shubham Budhiraja[2]

(i)                 To determine whether the goods purchased by a person (which would include a legal entity like a company) were for commercial purpose or not within the meaning of the Act would depend upon the facts and circumstances of each case.

 

(ii)                However, ordinarily “commercial purpose” is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities. The purchase of the goods should have a close and direct nexus with a profit generating activity.

 

(iii)              If it is found that the dominant purpose behind purchasing the goods was for the personal use and consumption of the purchaser and/or the beneficiary, or was otherwise not linked with other commercial activities, the question whether such a purchase was for the purpose of “generating livelihood by means of self-employment” need not be looked into.

 

(iv)              In short, the dominant intention or the dominant purpose of the transaction is to be looked into to find out if it had any nexus with some kind of profit generation as part of the commercial activities.


[1] CIVIL APPEAL NO.858 OF 2023

[2] LLB, ACS, BCOM(H), Advocate, Delhi High Court, Budhirajalawchambers@gmail.com

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