Linux: tftp not working, transfer timed out, what could be the reason

I have a server which runs cobbler and tftp server.
My task is to configure a read-write tftp server.

tftp is configured through xinetd and the configuration file looks like so:

service tftp
{
        disable                 = no
        socket_type             = dgram
        protocol                = udp
        wait                    = yes
        user                    = root
        server                  = /usr/sbin/in.tftpd
        server_args             = -B 1380 -v -s -c /var/lib/tftpboot
        per_source              = 11
        cps                     = 100 2
        flags                   = IPv4
}

The problem is that I'm even though it seems like it works, it doesn't accept connections and exiting with "transfer timed out" message.

Some details:

• tftp directory is:
  /var/lib/tftpboot
• selinux and iptables are disabled
• permissions on folder are as follows:

drwxrw-rw-. 8 root root 4096 2015-12-20 11:17 /var/lib/tftpboot/

• netstat shows that the port is opened:

udp 0 0 0.0.0.0:69 0.0.0.0:* 21455/xinetd

• There are no errors in the /var/log/messages log

This is how I test the configuration:

[root@ams2srv1 ~]# touch file.test
[root@ams2srv1 ~]# tftp localhost
tftp> put file.test
Transfer timed out.

tftp> quit
[root@ams2srv1 ~]# tftp localhost -c put file.test
Transfer timed out.
[root@ams2srv1 ~]#

[root@ams2srv1 ~]# touch /var/lib/tftpboot/test.file
[root@ams2srv1 ~]# tftp localhost -c get test.file
Transfer timed out.

Edit #1:
When trying the same commands while connecting to the real IP of the machine there's a new error message which looks like so:

[root@ams2srv1 ~]# tftp 10.x.x.38
tftp> put test
Error code 0: Permission denied
tftp>

But the permissions on the /var/lib/tftpboot folder are 777 as shown above.

Any ideas about how to solve this issue?