Yes it says that SUM OVERFLOW OCCURED, in this case SORT is not deleting any of the records. Infact it is putting all records into the Output file.
The other case is that when there is SUM overflow(no message in SYSOUT but hav checked by manually calculating the sum), it is simply summarising the duplicate records and putting the sum in one record and deleting the other records.
Can you please explain when a RC = 4 or RC =0 is returned.
DFSORT's OVFLO=RC0/RC4/RC16 option determines whether it will pass back RC=0/4/16 when sum overflow occurs. If you got RC=4 for a SUM overflow, then OVFLO=RC4 was in effect. If you got RC=0 for a SUM overflow, then OVFLO=RC0 was in effect. The OVFLO option can be specified as an installation option by the site (the shipped default is OVFLO=RC0) or as a run-time option for a particular application.