Perhaps we're seeing "building muscle" as two different things. You can strengthen your muscles while in a deficit, but you will not gain muscle mass. Many women are afraid if they lift too heavy, or if they utilize hardcore resistance or strength training, that they will 'bulk up'. You are not going to GAIN pounds of muscle while in a caloric deficit. You just won't.
You can build up the muscle that you have... train it, cause it to become more lean, shape it, make it stronger.... but you won't get 'bigger arms', etc... while doing 3DS and in a calorie deficit. And your 'muscle weight' won't balance out your fat loss.
In order to build muscle mass...as in gain pounds of muscle... you really do need to either be in a caloric surplus (and putting the extra calories to work), OR be carrrrrefully balancing and utilizing caloric partitioning in a caloric balance (that can work for some people but it almost takes obsessing because it's a complicated process). But in a deficit.... good luck 'gaining pounds of muscle'. It just won't happen (I'm sure there are exceptional cases, our bodies are all different...but in general)...and it's important people know that, because we wonder why the scale isn't changing, and then we say "Well, it's because I lost fat but gained muscle."
That is very unlikely, and it's more likely that you either are retaining water, or that what you are doing isn't actually effective and you're simply not losing weight or bodyfat in your current regimen.