Can income for aif be adjusted against brought forward business loss

Considering any income as your Business or Other Source income is totally subjective matter. It depends on various factors such as Frequency, Amount, Book entries, Nature of Txns. etc. etc. Say you have 32 crores of Investment amount in AIFs* but you have invested this much amount over the period of say 5 years then AO will directly disregard your claim of considering it as your business income. So the fact is it purely depends on the various factors of the case itself.

[* For those of my friends who are not aware of AIFs;

Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.]

Now carried forward and set off point; If you are able to convince AO that interest on these Investment are your business income then yes you would be allowed to Carried Forward & Set off your Business Losses against it.

But if AO takes it as your income from other sources then your Previous year business losses can't be Carried Forward & Set off against this. Rather your previous year losses would go forward (without setting off in current year) as it is to the next years upto max. of 8 years.