For a SEBI-registered Category II Alternative Investment Fund,...

For a SEBI-registered Category II Alternative Investment Fund, section 115UB preserves the character of non-business income, while section 10(23FBA) provides exemption at fund level and taxes such income in investors' hands. Reclassifying interest, capital gains, or investment-linked processing fees as business income requires examination of intention, transaction frequency and volume, accounting treatment, funding source, holding pattern, and regulatory restrictions. Investment accounting, limits on leverage and trading, and absence of systematic commercial activity support investment character. The mere description of a receipt as a processing fee is insufficient for reclassification, and Schedule PTI obligations apply to investors receiving pass-through income rather than the fund.