I hit into an another issue in SQL 2012 related to real-time logging.
I've logged bug here : https://connect.microsoft.com/SQLServer/feedback/details/1002565
The problem is when a long running Stored Procedure is run using sqlcmd.exe of SQL Server 2012, the output is not displayed in real-time. It gets displayed only after the query completes or user stops it.
In SQL Server 2008's sqlcmd.exe, the output is displayed as-is without any delay.
Workaround : The behaviour is not there in OSQL.exe.
Since Microsoft wants us to use sqlcmd.exe in place of osql.exe, I think this thing should be fixed.