Hi @umashankar2,
Looking back at what I wrote before I’m afraid I can see I made an error: the terraform.tfvars file isn’t used in Terraform Cloud, because Terraform Cloud actually overwrites that file with the variables you configured in the web UI, in order to make those variable values available to the Terraform run.
If you rename that file to something ending in .auto.tfvars then it should work. For example, you could rename it to terraform.auto.tfvars. .auto.tfvars files take precedence over terraform.tfvars, which means that in the Terraform Cloud context values set in .auto.tfvars will override a value provided via the Variables web UI in Terraform Cloud (because Terraform Cloud writes those into terraform.tfvars).