This problem was coming on SQL 2005 and SQL 2008 SQL server on both 32 bit as well as 64 bit platforms. After much digging into it, I found that issue comes only with fresh SQL server or any fresh database on the SQL server. The problem occures because I was trying to truncate the logs before taking FULL backup of the database which is not allowed by the Microsoft. This seems to be logical as well; logs cannot be truncated unless database is backed up atleast once. Here is the link from Microsoft web site which supports same thing.
http://msdn.microsoft.com/en-us/library/ms186865.aspx.
