Hi Shilpa,
suggest to use latest yocto dora
L3.10.17_1.0.0_IMX6QDLS_BUNDLE
: Source Code Download Steps Documentation and Demo Images.
IPU overlay is descibed in below documents
IMX51_IPU_LIB_UG
i.MX51 IPU V3 Library User's Guide
yocto package imx-test-3.10.17-1.0.0_beta :
mxc_v4l2_test/mxc_v4l2_overlay.c
this test is described in sect.6.4.2 "Video4Linux API test"
and sect.6.4.3 "IPU Device Unit test"
i.MX_6_Linux_Reference_Manual.pdf included in doc package
Also please check sect.3.5 "Multiple video overlay"
i.MX_6_Series_Yocto_Project_Multimedia_User's_Guide.pdf
included in that package
L3.10.17_1.0.0_LINUX_DOCS 
Linux 3.10.17 BSP & MM Bundle
Best regards
chip
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