Hello All i have following ini variable set in phpini file.
max_execution_time 50000
memory_limit 40M
post_max_size 8M
When i try to make thumbna
What is the resolution of your 700kb image? It doesn't really matter how big the original .JPG is. If it's a very "simple" image, it could literally be 10,000 x 10,000 pixels. When it's loaded/uncompressed by PHP, those pixels will require 10k x 10k x 3 = 286 megabytes (10x squared times 3 for each red/green/blue component value).
And of course, you say you've set memory limit to 40M, but you've run out of memory at just 29.25 meg. Could be that there's an override somewhere in the setup, perhaps in a site-specific web server .conf file, or a .htaccess, which is setting a lower limit than 40M.