ALTO is a future ground-based very high energy gamma-ray observatory based on water Cherenkov technique, which samples the secondary particles produced in the extensive air showers. This technique also provides long-term, continuous and wide field of view gamma-ray observations. Despite many advantages, the detection technique alone cannot determine the type of primary particle which gives rise to the shower. Hence every recorded event either belongs to the category of gamma-ray induced (signal) or cosmic-ray induced (background) shower. In the data analysis, the signal over background (S/B) discrimination procedure is performed to identify the event either as a signal or background. In the presentation, I will discuss the procedure used for S/B discrimination in the ALTO observatory and the practical difficulties in reaching complete background rejection.