How Can We Read Incoming SMS by using Application in iOS

Simply two words from Apple:

Not Possible

Detailed:

An iOS app can only access the data for which Apple supplies a documented public API. iOS can not access outside of the sandbox until Apple provides a public API for it. So intercepting/reading an incoming SMS not possible. And no idea when the iOS device is jailbroken.

No it's not possible in iOS, it's possible on jailbroken devices but you can not place your application in the App Store.