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Let, one entity has negative retained earnings i.e. loss. During the current year, the entity has profit that is under income tax. Till last year no deferred tax was accounted for. My question is how should I account for the income tax expenses?? Should I deduct the tax loss from tax liability arising from the current profit?? If yes, how?

In a basic case, you just have zero tax liability if you're allowed to use those previous losses to offset.

And then given you have a profit, maybe you have a deferred tax asset if profits are probable forward, to the extent unused losses remain.

But sounds like your question is a tax one rather than IFRS.