Here it is, it might not make sense to you but this is not the entire program. State y is where the problem lies.

REGISTER2: MOV C,P3.6
MOV ACC.0,C
MOV C,P3.7
MOV ACC.1,C
JB ACC.0,COMPARE_3
JNB ACC.0,COMPARE_4

COMPARE_3: JB ACC.1,STATE_A
JNB ACC.1,STATE_Y

COMPARE_4: JB ACC.1,STATE_Z
JNB ACC.1,STATE_X

STATE_Y:
MOV ACC,#02D
;MOV B,#00H
;INC ACC;DJNZ B,REGISTER2
DJNZ ACC,REGISTER2
RET