Assessee, an Indian company, is  engaged in business of development and export of computer software and related services  Assessee sub-contracted certain overseas work in China to Infosys China and made payment of sub-contracting charges to Infosys China.  Assessing Officer held that payments made to Infosys China was liable for tax deduction under section 9(1)(vii) as fees for technical services (FTS).  Tribunal held that in view of retrospective amendment to section 9, by Finance Act, 2010 and substitution of Explanation to said section, it is no longer necessary that in order to invite taxability under section 9(1)(vii), services must be rendered in Indian Tax jurisdiction and irrespective of situs of technical services having been rendered, according to India-China DTAA, fees for technical services will be deemed to have been accrued in tax jurisdiction in which person making payment is located. The  assessee was liable to deduct TDS from payment made to Infosys China.  Merely becasue clients were outside India that did not mean that assessee was carrying on business outside India and, thus, assessee’s case did not fall within exception of section 9(1)(vii)(b).  Held that if rate of tax applicable under DTAA is lower than 20 per cent tax rate as prescribed under section 206AA, TDS has to be deducted at such lower rate even if non-resident deductee fails to furnish its PAN.  Applicable TDS on sub-contracting charges paid to Infosys China by assessee should be considered at 10 per cent as per India-China DTAA instead of 20 per cent as per section 206AA of the Act.