Is DTAA useless ?

Hi,

I am overseas for many years and I lived in Singapore in year 2009. I had a NRO FD in ICICI bank that time and they deducted 15% TDS (instead of 30%) as a DTAA benefit.

I filed ITR2 for the period Apr 2009 to Mar 2010.  My interest income for that year was Rs 636272 and short term capital gains was Rs 232989.  Total income = 636272 + 232989 = 869261.

I received a demand note from Income tax department few days back in which they have calculated my tax liability as Rs 164778 + surcharge + interest etc

I am wondering if I am being taxed at 30% for income above Rs 5 lacs, then what is the use of DTAA ?  Why was TDS 15% if I have to pay 30% tax ?  Is the Income Tax Department's calculation correct ?   

thanks

Vinod