The timeout must be granted.
NFHS Casebook 2004-05 5.8.3 Situation E: The official erroneously grants Team B a time-out in a situation when Team B cannot have one. What happens now?
Ruling: Team B is entitled to use the time-out since it was granted. The time-out once granted cannot be revoked and is charged to Team B. All privelages and rights permitted during a charged time-out are available to both teams.
(From my physical book, not my dumb online one.
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