Can you retreat with Attacking Infantry in Axis and Allies Original - 2nd Edition
"Retreat" is not counted as a move. So the attacking infantry can move "back" to their original square. Or maybe a better way of looking at it was the attacking infantry moved to the border between its original square and the defending square, and then was stopped at the border.

It is the defender who cannot move or retreat during an attack. The defender has to beat off the attack or lose every piece (except for submarines). But the attacker always has the option to stop the attack.