Hello Siva,
This is system standard behavior.
By enabling order combination flag, it is possible to create one delivery for multiple orders(if there is no split criteria) but not possible to merger items from different orders into one item(even though there is no split criteria). An explanation could be the reference fields (e.g: LIPS-VGBEL) which each item has its own to preserve the reference to its ancestor document.
Therefore, in order to reach your goal, you need to make use of userexits or copy routine controls.
Please let me know if this is helpful or not.
Best regards,
Crystal Lin