"If you are using Franklin 'C' then the sbit declaration will be done in your userdefined header file itself rather than in your source file."

Surely that would give a "duplicate name" error, though?

Remember, as I pointed out earlier, the Compiler knows nothing about #include; it makes no distinction between "source" and "header" files - all it sees it the preprocessor "output", after all the text inclusion, substitution, comment-stripping, etc.
It makes no difference to the Compiler whether you put your sbits in a header or a "source" file!