Hi Anu,
We have implemented a similar test within our AD Test source for the IQService upgrade. Currently our AD Test source is having IQService hosted from a sandbox server on our production network (which is on a different domain). As far as the functionality of IQService is concerned, we haven’t run into any issues with having it hosted on a production server within the AD Test source, so long as you’ve correctly configured the IQService installation on the host machine. However, we’ve been running into some issues with this same setup when we tried to enable LDAPS in the domain settings. It’s likely something else causing that, but it’s worth mentioning.