The benefit to the applicant, if it is a U.S. application, is otherwise any patent you get might later be torn up for violating your duty of disclosure whatever you know about significant prior art.
If this is a U.S. application, you must cite it in an IDS document. Mentioning it in the body of the application is optional. There is a very important duty to inform the USPTO of anything you know of that would tend to show your claims as not new or obvious. It doesn't matter if it is a US patent, EPO patent, a published application that was rejected or a journal article - you must disclose.
Some patent attorneys would advise not to mention another patent in the body of your application. Specifically, not to go into details about what is different and definitely not to say what is wrong with it. Some judges have essentially narrowed claim in reading a granted patent due to things the inventor said in a background section.
When you get a rejection that cites some prior art is the time to differentiate from that prior art in your response.