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

You want to read raw lines to avoid problems with backslashes in the input (use -r):

while read -r line; do
   printf "<%s>\n" "$line"
done < file.txt

This will keep whitespace within the line, but removes leading and trailing whitespace. To keep those as well, set the IFS empty, as in

while IFS= read -r line; do
   printf "%s\n" "$line"
done < file.txt

This now is an equivalent of cat < file.txt as long as file.txt ends with a newline.

Note that you must double quote "$line" in order to keep word splitting from splitting the line into separate words--thus losing multiple whitespace sequences.

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>''