TinCan zip files not getting extracted as it is not able to create directory

I am facing a weird issue. I use SSH2 connection for enabling secure updates. Now I am working on an elearning system where Grassblade xAPI is to be used. Problem is when a tincan file (zipped) is uploaded in the xAPI interface it doesn’t get extracted and gives error as “Couldn’t create directory”. File and folder permission are perfect and it allows write permission to www-data. Also I have added SSH user to the www-data group.
Plugin and wordpress updates works fine but this particular xAPI is not able to unzip files after upload. However if I put FS_METHOD as direct then everything works correctly. But I dont want to use direct connection.
Is the problem with Grassblade xAPI (maybe the way they are trying to extract files)?

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