I need to connect to 2 different SQL server without creating linked server for generating report. Is it possible in SSRS 2008 report service?

Yes possible

You would just required created two data sources which points to both your SQL Servers. And inside report you can create datasets based on each of these data sources to retrieve and display the data from them. In cases where you would require merging the data from both the systems you can use functions like Lookup, LookupSet etc. Reports created in SSRS can be rendered in a variety of formats like Excel, PDF, CSV etc

see

http://www.allaboutmssql.com/2013/08/ssrs-example-for-lookup-lookupset-and.html

http://www.sqlcircuit.com/2012/03/ssrs-2008-r2-lookup-how-to-use-multiple.html