I think it should work ...

SELECT COL2 COLLATE SQL_Latin1_General_CP1_CS_AS, COUNT(COL2 COLLATE SQL_Latin1_General_CP1_CS_AS)

FROM #test

WHERE col2 IN ( 'AB', 'aB', 'xy' )

GROUP BY COL2 COLLATE SQL_Latin1_General_CP1_CS_AS