//In WCF service
FileStream fs = null;
public void AppendBytes(string fileName, byte[] data, long position)
{
    try
    {
        if (fs==null)//In first call, open the file handle
            fs = System.IO.File.Open(fileName, System.IO.FileMode.Append, System.IO.FileAccess.Write, System.IO.FileShare.None);

        fs.Write(data, 0, data.Length);
    }
    catch (Exception ex)
    {
        //Close handle in case of error
        if (fs != null)
            fs.Close();
    }
}

public void CloseHandle()
{
    //Close handle explicitly
    if (fs != null)
        fs.Close();
}

public void DoSomeOperation(string fileName)
{
    using (FileStream fsO = System.IO.File.Open(fileName, System.IO.FileMode.Append, System.IO.FileAccess.Write, System.IO.FileShare.None))
    {
        //Do something with file here, this is atomic operation so I am opening FileStream with 'using' to dispose at operation is over
    }
}

//In client
public void CallerFunction()
{
    //Read Data from sourceFile in chunk and copy to target file using WCF.AppendBytes on another machine
    WCF.AppendBytes(filename, data, pos);
    WCF.CloseHandle();
    WCF.DoSomeOperation(filename); //I get error here that file is in use with some other process. if I put a thread.sleep(1000) just before this statement then all works fine.
}

static  void TestHandleClose()
        {
            int i = 0;
            try
            {

                if (File.Exists(@"d:destinationfile2.exe"))
                    File.Delete(@"d:destinationfile2.exe");

                byte[] data = null;
                int blocksize = 10 * 1024 * 1024;

                for( i=0;i<100;i++)
                {
                    using (FileStream fr = File.Open(@"d:destinationFile1.zip", FileMode.Open, FileAccess.Read, FileShare.None))
                    {
                        data = new byte[blocksize];
                        fr.Read(data, 0, blocksize); //We are reading the file single time but appending same data to target file multiple time.

                        using (FileStream f = File.Open(@"d:destinationfile2.exe", FileMode.Append, FileAccess.Write, FileShare.None))
                        {
                            f.Write(data, 0, data.Length); //We are writing same data multiple times.
                            f.Flush();
                            f.Close();
                        }
                    }

                }

                if (File.Exists(@"d:destinationfile2.exe"))
                    File.Delete(@"d:destinationfile2.exe");

            }
            catch (Exception ex)
            {
                throw;
            }
        }

using (FileStream fileStream = new FileStream(file, mode, access, FileShare.ReadWrite))
{...