Is there a way (tool or a process) to convert .ipa file downloaded from iTunes to something (.app?) which can run on ios simulator?
No, there is no easy way to do this.
Here's a good answer that explains why it's not possible to disassemble an x86 binary and recompile it. Doing it from ARM to x86 would add one more huge obstacle to the problem.
I don't know why you would want to do this, but your best bet would probably be to search for the source code of the app you're trying to run in the simulator (or an alternative to the app, if it's not open source)