You can always try fighting but there are probably tight time restrictions. I do not practice in PA so I cannot advise you or tell you what those restrictions are. Contact a local construction or zoning attorney and they can probably give you a quick answer about whether you have reason to fight the setback and, if not, what you can do.
The information provided herein is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created by this answer. You should consult with a local attorney regarding your specific situation to obtain legal advice.
If you want to use the property per your current plan, you need to file an appeal with the Philadelphia Zoning Board of Adjustment. Here is a link to the necessary forms, costs, and procedures:
As long as your property is not owned by a business entity, you may represent yourself at the hearing. It would be best, however, to be represented by an attorney and to have other professionals, such as a civil engineer or architect, to provide testimony.
I would be happy to discuss this matter with you further, at no cost.
Construction setbacks are standard in virtually every city and county. If you are able to relocate your shed to an acceptable location on your property, you should do so. Fighting the government on this issue can be costly and expose you to potential fines and abatement proceedings.