500 (Internal Server Error) after 60 sec of transaction on WAS

I have same EAR file deployed on 2 different instances of WAS7. It runs fine one one server instance, while on other instance, the server returns 500 (Internal Server Error) when transaction time exceeds 60 seconds.

Application runs fine on both the server when transaction time is less than 60 sec.

General transaction properties in Application servers > server1 > Transaction service are identical on both the server instance.

I believe its not a coding issue and in that case its something related to server settings.

Solution

Yes, you are correct. Look at the definition from documentation:

The ServerIOTimeout specifies whether there is a time limit for how long the plug-in waits to send a request to or receive a response from the application server.

The default value for v7 for this parameter is 60 seconds, which is too low for your application. You have to change it.
You can just edit it in plugin-cfg.xml (see details in the first link).
However if you often regenerate your it, it will be better to change it in the server configuration ( Servers > Server Types > WebSphere application servers > server_name, and then, in the Additional Properties section, click Web server plug-in properties - details in the second link).
The third link gives you some more details how different values of the plugin parameters affects request handling and retries.