Restoring iPhone Via iTunes: Being prompted to update iPhone, despite iPhone already being up-to-date?

Hi Apple & Community,
I am trying to restore my iPhone 5 after forgetting my 'Restrictions' password. However, after connecting it to my Macbook Pro and attempting to reset the iPhone through iTunes, I am prompted to allow iTunes to download the latest 7.0.4 update. However, my phone is already updated to this, as confirmed by iTunes itself.
I have tried everything, obviously onboard resetting on the iPhone isn't an option due to the fact I can't remember my 'Restrictions' password, and I have already downloaded this update on my Mac when it first came out, as well as Backed up my iPhone on both iCloud and my Mac... Yet I am still getting the same result
Help!
Thanks in advance,

To remove the Restrictions Passcode you will need to Restore as New.
Restoring as New will Download the Latest iOS version for your Device and install it.
Is this what is occurring..? If so... it is correct.

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