Secondly: It depends on what you mean by 'building muscle'. Quite a lot of people think they're building muscle when they're losing weight and their muscle is simply showing through more. As always, it's about what, and how much you're eating. Also-- It's not possible to choose to build muscle in just one area.
If you're doing body weight exercises, chances are, you're not building that much. But, if you're losing weight and you're seeing a bulge, it's actually because definition is showing through more.