Hello Jittu,
"Development" is the process of designing and implementing solutions.
"Service Management" is the work that is done to provision and support solutions, once they've been built.
So, for example, you would perform development functions to build an application. After you deploy that application, it needs to be supported and run as a live service for your enterprise. Service Management helps you provide and support that application like the telephone company supports their phone service to you. You have someone to call if there's a problem. You get billed and know what your costs are. You have expected levels of operation and support. Etc.
I hope this helps.
My Best,
Frank Guerino, CEO
TraverseIT
On-Demand ITIL
http://www.TraverseIT.com