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That .htaccess file is for defense in depth. It is supposed to make sure that even if a script file, like a .php file, is uploaded to the directory, it will not be allowed to run.
There are a lot of different ways a sever can be configured, and some of those will throw an error if a .htaccess file is found, especially in a subdirectory.
There are supposed to be other checks along the way that prevent uploading script files, so if it is causing problems, the .htaccess file can be deleted. As an added protection, make sure the directory permissions are as restrictive as possible, i.e. 0755, or 0775.