When the iron pieces were in the boat, the weight of iron were balanced by the buoyant force.
Vidi = Vℓ dℓ
Vℓ, Vi = volue of liquid and iron respectively
dℓ, di= density of liquid and stone respectively
Since, di > dℓ ∴ Vi< Vℓ
Therefore when iron put in water, the level of water falls