Applicant Carter Jonas requested to upgrade a current standard billboard into an illuminated digital design adjacent To 203 Richardshaw Lane, Pudsey.
The company said the new proposal was "part of an industry wide drive to modernise and upgrade advertising infrastructure to meet modern requirements".
"It is proposed to replace existing billboard advertising displays on a like for like basis with lightweight digital posters of the same dimensions", the company added in the application.
"The quality of the images produced will mimic that of a traditional poster, with the overall aim of the project being to replace like for like with no adverse impact on visual amenity or public safety."
However, the plans have been rejected by Leeds council planners who said the design was at "odds with the prevailing residential characteristics and context of the area".
A report attached to the rejection states: "The Local Planning Authority consider the proposed digital advertising display in this location to be unacceptable by virtue of its scale, position, luminance and frequency of the transitioning images, which would act to introduce an overly prominent and intrusive form of development within the residential context of Varley Street.
"As such it would cause significant harm to the visual amenity and characteristics of Varley Street which is in the main a residential setting, and be unduly injurious to the residential amenity of those occupants that reside on the terrace of houses that sit directly opposite the signage on Varley Street."
An appeal process can now be made by the applicant to the secretary of state, following the rejection.
A similar proposal is currently under review on the same road - adjacent to 23 Richardshaw Lane.
Air Outdoor Media Limited submitted the request to upgrade the paper advert to a digital billboard.
Among the objectors to the proposal is Pudsey councillor Dawn Seary.
In a letter to the planning committee, she said: "I would like to object to the above planning application.
"I feel the light generated from this advertisement board is too much in a residential area.
"It is located near to a zebra crossing and I think it would distract drivers.
"Additionally where the council have declared a climate emergency, should [it] be encouraging electrical boards of this nature?
"Could I ask that all notices of this nature are sent to councillors to consider as there appears to be a number of them popping up around Pudsey recently."
Another objector said they "do not live in Piccadilly Circus" and nor do they "wish to".
"The character of the area is damaged by installations like this sign", they added.
"The application should be rejected."
A total of five objections have been submitted to the council.
A decision is expected to be made by May 16 to the second proposal.