Stack Exchange network consists of 175 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.
In our mosque, there isn't enough space to make two complete rows, so the Imam prays just one step in front of us (almost beside us), as in the following diagram:
Is this sort of congregational prayer allowed?
Yes, if situation doesn't support here in your case.
Related ruling, when two people pray together, they stand similarly like in your case.
Required, but never shown