"How does the inductive load of motors effect the working of software when the motors are isolated from dc supply as i am using relays ????"

Inductive spikes generated by the motor **travel** back via the mains wiring and then reach your 5 V power supply and then screw up the MCU ?!

You have two options :

1. Run the power for the AC motors from your neighbour's house. (Farther the better and your neighbour will pay for your experiments )

2. Read all that you can ( links already given by Prahlad) about noise suppression, filtering, grounding etc. and implement them.

Raghu