Is it possible to get cut out text effect like this using CSS/CSS3 only? or image is the only option to get this effect.

Is it possible to get cut out text effect like this using CSS/CSS3 only? or image is the only option to get this effect.

This should work:
Here's a little trick I discovered using the :before and :after pseudo-elements:
text-shadow is your friend. See this page for lots of examples what you can achieve with it. Example #8 looks promising.
I found this http://jsfiddle.net/NeqCC/
It supports white background and dark text
All credit goes to the creator
HTML
<!--
CSS3 inset text-shadow trick
Written down by Jyri Tuulos
http://about.me/jyrituulos
Effect originally found at http://timharford.com/
All credits for originality go to Finalised Design (http://finalisedesign.com/)
Note that this trick only works for darker text on solid light background.
-->
<h1 class="inset-text">Inset text-shadow trick</h1>
CSS
body {
/* This has to be same as the text-shadows below */
background: #def;
}
h1 {
font-family: Helvetica, Arial, sans-serif;
font-weight: bold;
font-size: 6em;
line-height: 1em;
}
.inset-text {
/* Shadows are visible under slightly transparent text color */
color: rgba(10,60,150, 0.8);
text-shadow: 1px 4px 6px #def, 0 0 0 #000, 1px 4px 6px #def;
}
/* Don't show shadows when selecting text */
::-moz-selection { background: #5af; color: #fff; text-shadow: none; }
::selection { background: #5af; color: #fff; text-shadow: none; }
What you really need for that particular effect is inset:
text-shadow: inset #000 0 0 0.10em; /* THIS DOESN'T WORK */
Unfortunately: "<shadow> is the same as defined for the ‘box-shadow’ property except that the ‘inset’ keyword is not allowed."
A slightly softer way of using the pseudo-elements Web_Designer mentioned:
.depth {
display: block;
padding: 50px;
color: black;
font: bold 7em Arial, sans-serif;
position: relative;
}
.depth:after {
text-shadow: rgba(255,255,255,0.2) 0px 0px 1.5px;
content: attr(title);
padding: 50px;
color: transparent;
position: absolute;
top: 1px;
left: 1px;
}
It's a bit simpler - to get the soft rim of the depression you use the text-shadow of the :after pseudo and make it transparent, rather than using two pseudos. To my mind, it looks a lot cleaner too - it can work at much greater sizes. I've no idea how fast it is, though you'll probably be using text-shadow sparingly anyway.
You can use the text-shadow style to set a shadow for the top left corner. It will look close to what you are looking for, but as far as I know there is no way to do exactly what you are looking for in CSS/CSS3
Yes you can achieve this effect with CSS and text, but it's a little insane. Basically you create a bunch of grey-zero css3 radial and linear gradients with a zero opacity and carefully position them over your text. But you'd be better off doing this in photoshop.