I'm looking for this Java 7 compatibility in JBOSS but seems that JBOSS 7 uses java 6 but not sure if it is compatible in java7.
That depends on your requirements.
You might use AS7 or WildFly if you have no requirement to have a supported version. But be aware that there is a bit work to do this migration . AS7 is a complete refactoring and there are some differences.
Nevertheless it will be better for the future.
If you have a short lifetime for the application you might stay with AS4 or migrate to EAP5 but for EAP5 you need to have a Red Hat subscription.
AS7 run be default with Java6 but you can use Java7
Thanks for this advise.