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Why is Undershipment Tolerance behaving different if the Transfer Order is Fulfilled in Shipment?

Summary:

I would like to validate the behavior of the Shipment Tolerance behavior in TO Fulfilment Status for Undershipment if the Transfer Order is fulfilled in Shipping and NOT interfaced in Order Management.

Setup and Steps only defined for Shipping. Order Management opt-in and setup are not enabled.
1. Undershipment Shipment Tolerance is defined at item level.
2. Created Transfer Order Shipment where Shipped Quantity is less than the tolerance levels/ not within tolerance levels.
3. Ship Confirm options was set to manually enter Shipped Quantity and Cancel Backorders

Expected Result: TO Fulfillment Status = Partially Shipped. Requested Quantity remains the same. Shipped Qty will reflect the undershipped quantity.

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