It is a hint to the answer of a question, it works best if you know the person well enough that they can figure out the answer on their own. Emotions & expressions can also hint towards the answer.
Also used if you actually don't know or are trying to cover your company's ass.
"Hey Bob, have you ever seen Iron Man 1 before?"
"I can neither confirm nor deny that"
"Hey Jill, do you have my pencil?"
"I can neither confirm nor deny that"
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