Are there any situations where it's beneficial to disable altitude reporting in TCAS?
The only time it would make sense as a normal or abnormal procedure to turn off altitude reporting is when your static encoder system is reporting no or incorrect altitude information. Especially in today’s world of mandatory Mode C and/or ADS-b in certain airspaces. ATC in those airspaces may have you cycle your system temporarily. Or, they could have you permanently  turn it off while you either land as soon as practicable or vacate the airspace until the system is repaired.