Short answer..... Yes.
IF you are currently running Windows 8.1 (w/update) you should be able to simply double click the ISO to automatically mount it as a virtual drive and then run setup.exe from there to perform the inplace upgrade.
Unfortunately Windows 7 does not have that functionality.
Microsoft has a tool that is suppose to do this....
http://www.microsoft.com/en-us/download/details.aspx?id=38780
I've only used it once and it didn't seem to work too well.
You can try it and see if it works for you, but....
You might be better off, if you are upgrading from Windows 7 to simply burn the ISO to a DVD using something like ImgBurn
http://imgburn.com/index.php?act=download (I recommend Mirror 7 direct from ImgBurn site)
OR
Burn it to a USB ThumbDrive using something like Rufus
http://rufus.akeo.ie/
Once you have the installation bits on the resource you choose, then it's the same deal.... from within your version of Windows, access the drive containing the installation media and use setup.exe to perform the inplace upgrade.