setTimeout does not work in nodeJS

I am writing a little dynamic HTTP server based on net module (homework assignment) that sends 408 response if the server user didn't call response.end() after two seconds.

No matter what I tried, the function is not invoked. Here's another code that demonstrates what I tried to do in my program:

var NET = require("net"); 
var server = NET.createServer(function(socket){
    console.log("In connectionHandler");
    socket.on('data',function(data) {
        console.log("New data");
        var timer = setTimeout(function(end){
            console.log("INSIDE TIMEOUT FUNCTION");
            if (end) {
                return;
            }
            throw new ERROR.ServerError('408',' Request Timeout','The \
            server has timedouted');
            },10,true);
        for (var t = 0 ; t < 100000000000 ; t++){}
        clearTimeout(timer);
    })

});


server.listen(4000, function() {
    console.log("server bound");
});

So, timeout is set to 10 ms followed by a very long loop, yet this doesn't work.

Why this is happening?