I have Universal app uploaded on app store,
Later based on requirements I have decided to revamp my entire app with iPhone only, so I have created new project in Xco
As per the error message in your question, you cannot remove support for a device type that was previously supported.
Since your previous version supported both iPhone and iPad all future versions must support iPhone and iPad.
In order to release an iPhone only version you will need to publish a new app to the store (using a different bundle id), either leaving the current one in place as it is or deleting it.
You are getting this error because of this rule:
Application update must continue to support all the devices previously supported.
How to get rid ?
Important Note:
Hope it will help to you.