Resolution:
Steps to configure connection from BW to JBOSS:


1) Install Jboss JMS server

2) Add jbossall-client.jar in designer std classpath or put this jar file in tpcl/tpcl_ver/lib folder.

3) In JMS connection’s configuration tab check ‘Use JNDI for Connection Factory’
    Set the following fields as specified:
            JNDI Context Factory: org.jnp.interfaces.NamingContextFactory
             JNDI Context Url     : jnp://localhost:1099

     In Advanced tab set the following:
             Topic ConnectionFactory : java:/ConnectionFactory
            Queue ConnectionFactory : java:/ConnectionFactory  

4) start JBOSS server using the following command:  run -c all

5) Do a test connection from Designer. If you get "UT factory lookup failed" use                  
    org.jboss.naming.NamingContextFactory instead of  org.jnp.interfaces.NamingContextFactory