Why does jsx code formatting not correctly

As you note, the Beautify extension is the root cause here (see this issue). That extension provides a document formatter that VSCode will run when you run the format command

A few options:

• Disable the extension
• Disable Beautify for just js files by removing the js entry from the "beautify.language" setting
• Make sure your file has a language mode of javascriptreact. I believe this will prevent Beautify from running on the file