You absolutely can lose fat while gaining muscle. Research has demonstrated this in variety of populations, like:
From a nutritional perspective, although a caloric deficit is needed to lose fat, a caloric surplus isn't necessarily needed to build muscle. This is because stored fat is stored energy. So, those stored fat calories are available for the body to use as fuel for the muscle-building process. That's the part most people miss.
But hold on, get this part straight: Your body can't turn fat into muscle or vice versa. Fat is fat and muscle is muscle. But, if you're overweight, your body can use your stored energy (fat) to actually fuel the muscle-building process when that fuel isn't coming from additional food intake.
The science tells us that the more fat and the less muscle you have, the greater your ability to gain muscle and lose fat at the same time. This doesn't mean you should go get fat. It just means your biology is working in your favor when you want to pack more muscle on, but have some fat to lose.
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