Aruna,
There is NOT a baseline/out of box offering to "Create Story" from an incident.
So it would require some customization to add this functionality, but it is pretty easy to do. You could use the existing baseline UI action for "Create Problem", or one of the other UI actions on the incident form, as an example of how to accomplish this.
The bulk of the work is defining:
1. The condition in which the button/UI action should be visible.
2. The script for your desired update logic. Typically this means mapping whatever fields you want to copy from the incident to the story (Short description is one common example). You might also add a Work note on the incident and/or story explaining that it was created from INC0000001.
3. What message to display to the user. Most of the baseline examples include an InfoMessage to accomplish this...
If you end up choosing to pursue this customization, just keep in mind that many of the users that have access to incident will NOT have create access for stories (since stories are part of Agile Development, which requires IT Business Management licenses). So you will want to take that into account when you setup the condition (#1 above) for the UI action.
This is what the baseline example looks like:
Sean
