First of all, why do these two need to be opposing choices? I can very well imagine a project which directly benefits your organization while at the same time allows you to acquire a new skill or refine an existing one. This would be the ideal solution as most organizations (somewhat understandably) are more oriented towards their own short term goals, rather than your long term goals. To be on safe ground, you need at least your boss's informal approval for self learning projects done in your normal work hours.
Collect ideas for option B and filter the list for projects which look exciting to you e.g. because you can learn something new related to them. Discuss these ideas with the persons involved, to get their support and agree on the rough solution. Then go to your manager and tell him/her something like this: "I thought I could use my free time to implement a tool to make life easier for the ... team who have been complaining about ... . We discussed that a simple solution built on the ... framework, using a ... DB would solve their problems. I assume I could implement this in about ... days and it would also allow me to learn more about technology ... which could come handy in the future, as I have heard rumors that project ... next year is going to need this."
To ensure success, you may want prepare two or more such project ideas to offer a choice between them to your manager. Thus (s)he can make the final choice based on business value for the company (and retain the feeling of being in control - which may be an important factor for some persons and some kinds of companies), but you too get what you are after.
I want to improve on leadership or communication skills whee I need improvement. But the organisation have some initiatives which needs my technical abilities.
OK so the two options are actually contradicting. What is more, improving your leadership and organisation skills can hardly be done in isolation. Fair enough, you can read some books on it, but to get any actual practice you need to cooperate with others.
The other side of the coin is that even if you have read all the world's literature on these subjects, your management must acknowledge this for you to move forward in your career (a communication challenge for you :-) .
Both of these boil down to the conclusion that you need management support. So what I recommend is to share your time between the two options. Pick a project for Option B which can be finished in, let's say, half of your free time, then go to talk with your boss. You may introduce your idea similarly to the above, then add that you would like to use part of your remaining free time to improve your communication and leadership skills, and ask for his/her suggestions on this. Prepare some ideas yourself to avoid looking totally clueless, but the main point is to get his/her support, and to get your efforts channeled into your organization's leadership training programme (if there is one).