They must be treating the payment as payment made for Professional or technical services under sec 194J and hence they are deducting 10%. This would have been Ok had it been for software application maintenance. But if it was for Hardware Annual maintenance contract, since transfer of parts is also involved and such contract comes under the nature of works contract, the rate of TDS should have been as per section 194C i.e 2% (and 1 % if the person executing the contract is an individual or HUF). Getting a correction from CDA may be next to impossible. So it would be better to collect the TDS form for 10% deduction and claim refund with tax authorities. In subsequent bills may be one can submit the bill clarifying it is works contract and deduction has to be done under section 194C and try for deduction at lower rate.

Absolutely correct