You're missing either a semicolon or a newline before do.
Both of the following scripts will work.
IFS=$'\n'
for line in `more extensions.txt` ; do
if grep '[219..223]' ${line:96:4} ; then
echo "1"
else
echo "2"
fi
done
IFS=$'\n'
for line in `more extensions.txt`
do
if grep '[219..223]' ${line:96:4} ; then
echo "1"
else
echo "2"
fi
done
Note: Your script is also missing a shebang. It's better practice to include one in the first line of your script.
This allows you to call your script using ./script.sh if the file's executable bit is set, in addition to sh script.sh or bash script.sh