Hi Bavaliya,
Thank you for posting back and sharing so detailed information with us.
We tested it again with the same column and same formulas you provided above, as shown below:


Then we used the validation settings again and we can reproduce the same situation as yours. As shown below:


We have also searched a lot and we may not find any related article mentioned it, and we also cannot find any article mentioned such limitation. Per my test, the simple formula works when using calculated column.
Given this situation, we do understand the inconvenience caused apologize for it. This issue may need to be checked from background. The best way to troubleshoot the issue is to report the issue to the related Team. We’d suggest you contact your office 365 administrator to go to Office 365 Admin Center-> Support-> New Service Request, the support engineers there have the correct escalation channel and this is the most efficient way to report such issue. You can refer to this article to check the way how to raise a ticket. Ways to contact support for business products - Admin Help.
Thank you for your understanding!
Best Regards,
Sukie