It's succinct, concise, and a powerfully firm rejection while also being gentle enough to say that neither person is at fault and should not blame themselves all in the most honorable way possible. This Take will hopefully be very short and to the point of the title. I wanted to point this out because from what I have noticed, it seems like women have trouble understanding how to let a man down gently when he wants to be more than friends, especially since everyone has a different way of thinking. And yet, this very situation is an extremely common thing that the vast majority of women will deal with at some point in their lives. But also please understand that this Take can apply to both hetero men and women.
It's entirely understandable that when you like who someone is as a person but you just don't want to be with them romantically, you simply don't want to hurt his or her feelings much less to cause them to feel insecure. And this obviously goes for both men and women who have to let someone down. And so you might give them a compliment in the hopes it will make them feel better about your ultimately negative view of them in the arena of romance.
The problem with leaving your rejection at a compliment and a nervous "no" is that it can often be unintentionally misleading. When someone is in love, thoughts like the following may very well be something they contend with internally. Your suitor or admirer may take it as though maybe you aren't there right now, but perhaps if he or she focuses on showing you their redeemable qualities you could hopefully come around some day. You likely don't want them to think this, but remember that the person before you is in love. And especially if your heart really does already belong to someone else at the time who likes you back, the revelation that at some point afterwards you've become romantic with another person will be that much more devastating to your admirer after he or she has entertained any little hope of escape from facing the abyss of unrequited love. What's worse is that they might feel it is their own fault. That they failed.
I understand that in women's case specifically, women especially feel that they want to avoid conflict. So while they might tend to respond to a suitor with a compliment and a nervous "no", men are also taught to never ask "why" even if compelled to; because to ask "why" makes women and perhaps anyone in the same position feel afraid and uncomfortable. But the juxtaposition of a compliment and a "no" is naturally going to evoke curiosity as to "why".
The suitor or admirer will want to know, "what's wrong with me?" And ironically, he or she might possibly feel just as small or even smaller due to your compliment than if you hadn't given one. The reason for this is simple. Omission can be a sign of dishonesty. Socially and in conversations, it is often done to hide something. How can they trust that your compliment was genuine given your omission of the reason as to why you ultimately said no? Obviously, you don't owe the person a reason or perhaps anything. But you probably don't want to be mean either. And you probably tend to be proactive and want to show as much gentleness, kindness, and even gratitude as possible. It's often flattering when someone loves you, and it takes quite a bit of courage to come out and confess something like that after all, right?
So to get to my point, when you say that you are already in love with someone else or that your heart belongs to someone else, this is your rejection and your reason and your explanation. Love is something that you don't really have to know how it works. It just is. Not even you may know exactly why you love someone else, but you just do. And therefore, you can't love the potential suitor in front of you. It isn't his fault, nor is it really yours. You don't even have to say who it is. You can just say that they've never met the person you love, or that it's someone online or long distance. When you are already in love with or deeply committed to someone else, there is no one to blame. It was very well just bad timing more than anything.
Your suitor or admirer will be disappointed, and there is obviously no avoiding that. However, at least now by saying that you are in love with someone else, you've given the individual that you're rejecting a more proper opportunity to think outside of self, and to look at your perspective as well as the bigger picture. You have genuinely provided a greater context for them to appreciate instead of leaving them more likely to struggle and remain stuck thinking of their own shortcomings and insecurities more than they ought to, even if you don't actually love someone else yet.
But hey, this is just my take. Thanks