—“Yes—the army is large, formidable, powerful, and fully equipped.” Even though you know this is not the case, there is no harm in such an answer, because it brings a great benefit: it strikes fear into the hearts of the enemy.
The same rule applies to reconciling people. Someone may approach you saying, “I heard that so-and-so is backbiting and insulting me, saying this and that.” You reply, “Absolutely not—he has said nothing about you.” This is permissible, for it restores harmony between people.
A further example involves the exchange between husband and wife, or wife and husband, words that nurture closeness and affection. A husband might tell his wife, “You are precious to me; I love you more than any other woman,” and the like—even if it is an exaggeration—because such statements foster affection and the benefit warrants them.
The essential point is that lying becomes obligatory when it is the sole means of saving an innocent life from destruction or protecting inviolable property from loss, and it is permissible whenever it yields a major benefit. Still, it is better to resort to tawriyah—speaking with deliberate ambiguity—so that one avoids an outright lie. Allah is the One who grants success.