Got the solution. The error was due to the settings of virtual terminal in Proteus.
I have added an LCD (in standard 4 bit mode) to display the data received.
The data being expected by the program is charachters sandwiched between charachters X & Z e.g. X45Z , X458Z etc
As described in the virtual terminal, the data received is in the form of ASCII charachters.
I have got alot of help from this forum, therefore am attaching the complete project with this thread to help the future comers of this forum.
Special Thanks to uludere72.
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