Using visual studio 2012 on windows 8 x64 aparantly this is caused by msbuild being moved into .net but I havn\'t seen how to fix it yet.
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I was facing same issue while building some of project.
I used Visual Studio 2015 IDE, there it was working fine but while giving build from PowerShell script, it was giving toolset related "The builds tools for v140 (Platform Toolset = 'v140') cannot be found." error
So eventually it was issue of pointing to incorrect MSBUILD exe for the respective project.
Earlier I was pointing to $MSBUILD="C:\windows\Microsoft.NET\Framework\v4.0.30319\MSBuild.exe
And build was successful when I updated script to point to $MSBUILD="C:\Program Files (x86)\MSBuild\14.0\Bin\MSBuild.exe"
Hence to resolve the issue, please make sure to use correct MSBUILD.