If you visit the Lean Gains website you will find a nutritional routine that will allow for fat loss and muscle gain which involves cycling your calorie intake from day to take and timing your food consumption. It is a proven method that will allow you go gain muscle and lose fat at the same time if you dedicate yourself to it. Personally, I'm not trying to be that involved in myself and I would rather stay small.
If you are following a standard diet for fat loss (i.e. being on a calorie deficit, eating lots of protein, trying to eat 'clean' whenever possible) then the answer to the original question is both yes and no.
The answer is no because when you are on a calorie deficit, muscle gains will be minimal (a few pounds at most) and will take quite a long time. It is a terribly inefficient way to build muscle, and you are going to see results much quicker if you go on bulking/cutting cycles.
The answer is yes because despite only having the potential for minimal muscle gains, you will LOOK bigger by losing your layers of fat because your muscle definition will show. Your measurements may shrink but you would never know it based on looking in the mirror. I can vouch for this personally....I am at a stalemate right now in terms of gaining muscle but each day I look more muscular in the mirror as the fat continues to melt away.
If you are a truly skinny person without much muscle then a bulk/cut cycle is your best bet. Otherwise, I would focus on fat loss more than muscle gain and you may be surprised at your results, even without packing on a bunch of muscle weight.
Honestly, this question is too complex and has too many variables and angles to really explain here. You could literally write a book about it. Without knowing your current body composition and exact goals it is tough to speak on it further.