Environment data

• VS Code version: 1.60.0-insider
• Jupyter Extension version (available under the Extensions sidebar): v2021.8.2031165864
• Python Extension version (available under the Extensions sidebar): v2021.9.1144093763
• OS (Windows | Mac | Linux distro) and version: Windows (local), Amazon Linux 2 (remote)
• Python and/or Anaconda version: Python 3.7.6, IPython 7.21.0
• Type of virtual environment used (N/A | venv | virtualenv | conda | ...): virtualenv
• Jupyter server running: Remote

Expected behaviour

When running a cell marked with # %% in a .py file, the indentation level of the cell is the "base level" for all lines in the cell when sent to the interactive window.

Actual behaviour

"run current cell" results in

The first line is treated correctly:

results in

The indentation of # %% makes no difference:

results in

Steps to reproduce:

Logs