In the return of income  the assessee claimed profit (surplus) as exempt under the provisions of sections 11 and 12 of the Income-tax Act, 1961. The AO examined the activity of the assessee and concluded that its activities were in the nature of trade, commerce or business in view of the dominant activity of acquisition and sale of immovable properties, that they were being carried out with the motive for profit and thus the assessee was not entitled for exemption u/s. 11 of the Act. He, accordingly, assessed the surplus as income from business. Further, observed that certain amount received for infrastructure fund was directly credited to a separate account of fund, without crediting towards income of the assessee. Therefore, the said amount added to the total income. The AO further made an addition by way of disallowance for depreciation. Tribunal held that (i) the activity of authority of developing of land was charitable in nature and eligible for registration u/s.12AA. The claim of the assessee for exemption u/s. 11 in order and observed that the assessee had applied more than 85 per cent. of the total income towards charitable purposes. The registration granted by the Commissioner u/s.12AA of the Act was validly in operation in the relevant year and thus, the assessee was entitled to exemption u/s.11 subject to fulfilling the conditions contained therein. The assessee had produced the prescribed form as laid down in the Rules, with the request for carry forward of the amount for utilization in subsequent years and, thus, had fulfilled the requirement as prescribed in Explanation 1 to section 11 of the Act. Assessee entitled to claimed exemptions.  (AY 2014-15)