We report a new compact galaxy , SDSS J122958.84+000138.0 ( SDSS J1229+0001 ) , which has unique morphological and stellar population properties that are rare in observations of the nearby universe . SDSS J1229+0001 has an r -band absolute magnitude ( M _ { r } ) and half-light radius ( R _ { h } ) of - 17.75 mag and 520 pc , respectively . Located in a fairly low density environment , morphologically it is akin to a typical early-type galaxy as it has a smooth appearance and red colour . But , interestingly , it possesses centrally concentrated star forming activity with a significant amount of dust . We present an analysis of structural and stellar population properties using archival images and VLT/FORS2 spectroscopy . Analysis of UKIDSS H-band image shows that the observed light distribution is better fitted with two components Sérsic function with inner and outer component effective radii 190 and 330 pc , respectively . Whereas , overall half-light radius measured in H-band is much smaller compared to optical , i.e 290 pc . We prepared a Spectral Energy Distribution ( SED ) from optical to FIR and interpret it to derive star-formation rate , dust mass and stellar mass . We find that the SDSS J1229+0001 has dust mass M _ { dust } = 5.1 \times 10 ^ { 5 } M _ { \sun } with a dust to stellar mass ratio log ( M _ { dust } /M _ { * } ) = - 3.5 . While the observed stellar population properties are – to some extent – similar to that of a typical S0 galaxy , a unified view from stellar population and structural properties may suggests that SDSS J1229+0001 is a smoking gun example of a compact early-type galaxy in formation .