TO is allowed even when source supply Org has no on-hand?

Summary:

Feature:

Request Internal Material Transfers when On-hand Supply Isn't Available in Source supply Org

is turned OFF

But still system allows to create TO and select the Supply Source org that has zero -on hand

Expectation was that it should not allow the Org with Zero On-hand to select to create supply request. Any explanation about this behavior?

Content (please ensure you mask any confidential information):

Version (include the version you are using, if applicable):

Code Snippet (add any code snippets that support your topic, if applicable):