Your query has to be answered in the light of Section 2(15) of the Income Tax Act 1961, which defines 'charitable purpose' as under:
(15) "charitable purpose includes relief of the poor, education medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility:
Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:]
[Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;]
Even though the NGO's activity has annual gross receipts of more than Rs 25 lakhs (the profit itself being of Rs 1 cr), and it is a commercial activity asaforesiad, as the profit is not generated from doing any act for advancement of any object of general public utility, the income of the NGO will be exempt under Section 11 of the Income Tax Act 1961.