[shell] Reading file line by line (with space) in Unix Shell scripting - Issue

Try this,

IFS=''
while read line
do
    echo $line
done < file.txt

EDIT:

From man bash

IFS - The Internal Field Separator that is used for word
splitting after expansion and to split lines into words
with  the  read  builtin  command. The default value is
``<space><tab><newline>''

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