Well it seems that you dont know the hardware aspect niether
programing 8051. First of all generating 120KHz from Timer is
useless exercise. You can simply use a 555 timer and generate
required frequency. 7135 can take upto 1MHz and if you want to
get more readings than 3/sec then use some LS or CMOS oscillator
for making 1MHz clock. Also you need to make hardware AND gate
for this frequency and the BUSY signal.
Then you can set either T0 or T1 for counting as 16bit counter , not timer. Feed the ANDED signal to counter input which is T0 or T1. Also feed the BUSY signal to gate which is
INT0 or INT1. Set the timer value as FFFFh - 10,001d.
Now when you allow the timer to run then with gating of BUSY
counts are exactly as required. If you want POL and other signals then these can be latched with some other PORT inputs.
I had used this type with clock generated by dividing the
11.59 MHz crystal to 115Khz by divide by 100 hardware. 74LS90 or
74LS164.
You can post what ever code you are trying. Everybody will
help to fix problem in that code. But nobody can give you code
FREE on the platter.