Ok. I was facing this problem because I was trying to install by copying Live CD to one partition and trying to install on another partition of same hard disc. The partition where I copied the contents of Live CD gets mounted as /cdrom and that is the reason why Ubiquity does not detect the partitions.
When I was booting from USB it also detected the partition where I had previously copied the LIve CD and mounted it at /cdrom.
Then I deleted the Live CD contents from the hard disc and tried again by booting from USB stick.
This time USB stick was mounted at /cdrom and Ubiquity detected the hard disc partitions.
Ok. I was facing this problem because I was trying to install by copying Live CD to one partition and trying to install on another partition of same hard disc. The partition where I copied the contents of Live CD gets mounted as /cdrom and that is the reason why Ubiquity does not detect the partitions.
When I was booting from USB it also detected the partition where I had previously copied the LIve CD and mounted it at /cdrom.
Then I deleted the Live CD contents from the hard disc and tried again by booting from USB stick.
This time USB stick was mounted at /cdrom and Ubiquity detected the hard disc partitions.
For me there is no problem.