putchar1 in for checking the buffer full or not and to activate TIO

#include <stdio.h> 
#include <C8051F120.H>
#include <string.h> 
#include <ctype.h>
#include <stdlib.h>

xdata char startapp _at_ 0x1000;

void config (void)
{
	int n = 0;

	WDTCN = 0x07;	// Watchdog Timer Control Register
   WDTCN = 0xDE;   // Disable WDT
   WDTCN = 0xAD;
	
   SFRPAGE = 0x0F;
	XBR0 = 0x04;	// XBAR0: Initial Reset Value
	XBR1 = 0x00;	// XBAR1: Initial Reset Value
	XBR2 = 0x44;	// XBAR2: Initial Reset Value added on 11 July 2004 for Com2

	SFRPAGE = 0x0F;
	P0MDOUT = 0x05; // Output configuration for P0 
	P1MDOUT = 0x00; // Output configuration for P1 
	P2MDOUT = 0x00; // Output configuration for P2 
	P3MDOUT = 0x00; // Output configuration for P3 
	P4MDOUT = 0x00; // Output configuration for P4
	P5MDOUT = 0x00; // Output configuration for P5
	P6MDOUT = 0x00; // Output configuration for P6
	P7MDOUT = 0x00; // Output configuration for P7

   P1MDIN = 0xFF;  // Input configuration for P1

// Oscillator Configuration	

    SFRPAGE = 0x00;
    FLSCL = 0x10;   // FLASH Memory Control

    SFRPAGE = 0x0F;
	 OSCXCN = 0x00;	// EXTERNAL Oscillator Control Register
/*	
    for (n = 0; n < 1000; n++) ;            // wait for osc to start
    while ( (OSCXCN & 0x80) == 0 );        // wait for xtal to stabilize
*/

	 OSCICN = 0xC3;	// 83 ALSO SAME Internal Oscillator Control Register

	 PLL0CN = 0;

    PLL0DIV = 0x01; // PLL pre-divide Register 
    PLL0FLT = 0x31; // PLL Filter Register
    PLL0MUL = 0x02; // PLL Clock scaler Register
    PLL0CN = 0x01;  // PLL Control Register

    for(n = 0; n < 500; n++);               // wait at least 5us
    PLL0CN |= 0x02;                         // enable PLL
    while ( (PLL0CN & 0x10) == 0 );        // wait for PLL to lock

// select PLL as clock source

    CLKSEL = 0x02;  // Oscillator Clock Selector
	
// UART0 Configuration

    SFRPAGE = 0x00;
    SADEN0 = 0x00;      // Serial 0 Slave Address Enable
    SADDR0 = 0x00;      // Serial 0 Slave Address Register

//	 SMOD0 = 1 disable  baud rate devide / 2
//  Timer3 Generates Baud Rate 

    SSTA0 = 0x1A;       // UART0 Status and Clock Selection Register

// UART0 Mode 1 8bit auto variable baud rate

    SCON0 = 0x50;       // Serial Port Control Register
    SCON0 &= 0xFC; 	   //clear interrupt pending flags

    PCON = 0x00;        // Power Control Register

// UART1 Configuration

    SFRPAGE = 0x01;     // Baud Rate same as Uart0 38400
    SCON1 = 0x10;       // Serial Port 1 Control Register   
    SCON1 &= 0xFC; 	   // clear interrupt pending flags
                        // tested on 11 July 2004.OK

// Timers Configuration

    SFRPAGE = 0x00;
	 // Timer 1 uses SYSCLK as time base
	 // timer0/1 prescales = SYSCLK / 4
    CKCON = 0x01;   // Clock Control Register

// timer 1 generates UART1 baud rate
// TIMER 1 USES CLK PRESCALER. TIME BASE IS SYSCLK / 4

    TL0 = 0x00;     // Timer 0 Low Byte
    TH0 = 0xee;     // Timer 0 High Byte 
    TL1 = 0x00;     // Timer 1 Low Byte
    TH1 = 0x61;     // Timer 1 High Byte 
    TMOD = 0x22;    // Timer Mode Register 8bit auto reload
    TCON = 0x50;    // Timer Control Register 

// Timer 3 for UART0 BAUD GENERATOR		
// Time Base is SYSCLK @ 49MHZ
// Baud Rate 38765  = FFB1
// Baud Rate 117788 = FFE6

    SFRPAGE = 0x01;
    TMR3CF = 0x08;  // 0 Timer 3 Configuration
    RCAP3L = 0xB1;  // Timer 3 Reload Register Low Byte
    RCAP3H = 0xFF;  // Timer 3 Reload Register High Byte
    TMR3H = 0x00;   // Timer 3 High Byte
    TMR3L = 0x00;   // Timer 3 Low Byte
    TMR3CN = 0x04;  // Timer 3 Control Register

   SFRPAGE = 0x00;
	RSTSRC = 0x00;	// Reset Source Register 

// Interrupt Configuration

//    IE = 0xA1;          //Interrupt Enable
    IP = 0x00;          //Interrupt Priority
    EIE1 = 0x00;        //Extended Interrupt Enable 1
    EIE2 = 0x00;        //Extended Interrupt Enable 2
    EIP1 = 0x00;        //Extended Interrupt Priority 1
    EIP2 = 0x00;        //Extended Interrupt Priority 2

    SFRPGCN = 0x00;

}   //End of config

void delay(unsigned int k)
{
   k = k * 2;	  

   while(k)	      
      k--;
}

void delay_ms(unsigned int y)
{
   while(y)
   {					 
      delay(560);  
       y--;
   }
}

#define TBUF_SIZE   128 
#define RBUF_SIZE   128 

static xdata unsigned char tbuf [TBUF_SIZE];
static xdata unsigned char rbuf [RBUF_SIZE];

static xdata unsigned char t_in = 0;
static xdata unsigned char t_out = 0;

static xdata unsigned char r_in = 0;
static xdata unsigned char r_out = 0;

static bit ti_restart = 0;   /* NZ if TI=1 is required */

static unsigned char oldsfrPage = 0;

void com_isr (void) interrupt 4
{
    oldsfrPage = SFRPAGE;
   
    SFRPAGE = LEGACY_PAGE;

//Received data interrupt.

   if (RI0 != 0)
   {
     RI0 = 0;
     if (((r_in - r_out) & ~(RBUF_SIZE-1)) == 0)
     {
   	rbuf [r_in & (RBUF_SIZE-1)] = SBUF0;
    	r_in++;
     }
   }	

// Transmitted data interrupt.

   if(TI0 != 0)
   {
      TI0 = 0;
      if(t_in != t_out)
      {
   	SBUF0 = tbuf [t_out & (TBUF_SIZE-1)];
        t_out++;
        ti_restart = 0;
      }
      else
      {
   	ti_restart = 1;
      }
   }

  SFRPAGE = oldsfrPage;
}

#pragma disable

char putchar1 (unsigned char c)
{
   SFRPAGE = LEGACY_PAGE;


//If the buffer is full, return an error value.

  if (com_tbuflen () >= TBUF_SIZE)
     return (-1);

//Add the data to the transmit buffer.  If the
//transmit interrupt is disabled, then enable it.


  tbuf [t_in & (TBUF_SIZE - 1)] = c;
  t_in++;

  if(ti_restart)
  {
    ti_restart = 0;
    TI0 = 1;               /* generate transmit interrupt */
  }
  return (0);
}

#pragma disable

int getc (void)
{
   if (com_rbuflen () == 0)
     return (-1);

   return (rbuf [(r_out++) & (RBUF_SIZE - 1)]);
}

void putchar2 (unsigned char c)  
{
   SFRPAGE = 0x01;    
   while (!TI1);  // ok
   TI1 = 0;       // ok;
   SBUF1 = c;     // ok 
   SFRPAGE = 0x00; 
}

// waits till data is received
unsigned char getc2 ()
{
  unsigned char c;
  SFRPAGE = 0x01;    
  while(!RI1);
  RI1 = 0;
  c = SBUF1;
  SFRPAGE = 0;    
  return (c);
}

void recvbyte2()
{
   unsigned char c=0;

   SFRPAGE = 1;
   if(RI1)
   c = getc2();
   else
   {
      SFRPAGE = 0;
      return;
   }

   if(c)
   switch(c)
   {
      case '*':	
	if(getc2() == '*')
	{
            startapp = 66;
            RSTSRC = 0x10;
	}		 
	break;
      default :
	putchar2(c);
	break; 
   }
 SFRPAGE = 0;
}

void Init_COM()
{
  SFRPAGE = UART1_PAGE;
  RI1 = 0;    // uart1
  TI1 = 1;
  SFRPAGE = LEGACY_PAGE;

   RI0 = 0;
   TI0 = 0;

   t_in = 0;     // transmit buffer
   t_out = 0;
   r_in = 0;     // receive buffer
   r_out = 0;
   ti_restart = 1;   // to send first character

   ES0 = 1;  // enable Serial Interrupt
   PS = 1;   // serial interrupt to high priority
   EA = 1;
}

void main()
{
   startapp = 0;
   config();
   Init_COM();

   while(1)
   {
      delay_ms(100);

      SFRPAGE = 0;

      if(putchar1('A') == -1) // if buffer is full
         putchar2('E');
      else
	putchar2('B');

      SBUF0 = 'C';

      if(TI0)
	putchar2('D');
      if(ES0)
	putchar2('F');

      if(EA)
	putchar2('G');
	
      recvbyte2();   // UART1 characters echoes
   }
}

thanks

haribabu