Definition of Deemed Profit:
Deemed profit refers to the profit or income that is assumed or considered to have been earned by an individual or entity, even if it has not been actually received or realized. It is a concept used in income tax laws to ensure that individuals or businesses pay taxes on income or profits that they are deemed to have earned, regardless of whether they have actually received the income.

Profits and Gains to Business or Profession - Head of Income:
Under the income tax laws, the profits and gains earned from a business or profession are considered as a separate head of income. This means that the income or profit earned from a business or profession is taxed separately from other sources of income, such as salary or capital gains.

Computation of Profits and Gains to Business or Profession:
The computation of profits and gains from business or profession involves the following steps:

1. Determination of Gross Receipts: Gross receipts refer to the total revenue generated from the business or profession during a specific period.

2. Deduction of Allowable Expenses: Allowable expenses include all the expenses incurred for the purpose of earning the business or professional income. These expenses may include rent, salaries, utilities, marketing expenses, etc. Deducting these expenses from the gross receipts gives the net income from the business or profession.

3. Calculation of Deemed Profit: In certain cases, the income tax laws prescribe specific methods or formulas to calculate the deemed profit. For example, the presumptive taxation scheme allows small businesses and professionals to declare a certain percentage of their gross receipts as their deemed profit, without maintaining detailed books of accounts.

4. Adjustment for Depreciation: Depreciation is the reduction in the value of assets over time due to wear and tear, obsolescence, or other factors. The income tax laws allow businesses and professionals to claim depreciation as an expense, which reduces their taxable income.

5. Taxation of Profits and Gains: The net income or profit from the business or profession, after adjusting for allowable expenses and depreciation, is subject to taxation at the applicable income tax rates.

Importance of Deemed Profit:
Deemed profit is important in income tax laws as it ensures that individuals and businesses cannot evade taxes by not realizing or receiving their income. By deeming a certain level of profit, the tax authorities can ensure that everyone contributes to the tax system based on their presumed income.

Conclusion:
Deemed profit is a concept used in income tax laws to determine the income or profit that an individual or entity is assumed to have earned, regardless of whether it has been actually received. It is particularly relevant in the computation of profits and gains from a business or profession, where specific methods or formulas may be used to calculate the deemed profit. By considering the deemed profit, the income tax authorities can ensure that individuals and businesses pay taxes on their presumed income, thereby preventing tax evasion.