I tried to reproduce the same and it's working perfectly fine
CREATE TABLE #temp_table
(
i INT,strvalue varchar(10)
)
INSERT STATMENTS :
INSERT INTO #temp_table (i,strvalue) VALUES (1,' ');
INSERT INTO #temp_table (i,strvalue) VALUES (2,NULL);
INSERT INTO #temp_table (i,strvalue) VALUES (3,'HELLO');
QUERY :
SELECT i,CASE strvalue WHEN ''
THEN NULL
ELSE strvalue END AS AI FROM #temp_table