Strange makefile behaviour in gmake 4.0 - makefile

Question

I am facing some strange changes in behaviour between gmake 3.8 and gmake 4.0. This is observed on the same machine, running Windows 7. The following is a much simplified example - it is obviously not a useful makefile, but illustrates the issue.
make -v output for 3.8 identifies as:
GNU Make 3.80
and 4.0 as:
GNU Make 4.0
Built for Windows32
The "Built for Windows32" is missing from the 3.8 output, but I assume this was added after the 3.8 release.
Consider the following directory structure:
.
./Build
./PROJ1
./PROJ1/Makefile
And following makefile in PROJ1:
.PHONY: build clean
build:
#echo Build Recipe
clean:
#echo Clean Recipe
This makefile is run from the parent directory eg:
make -C PROJ1 build.
In gmake 3.8, this does the expected thing of printing Build Recipe:
make: Entering Directory PROJ1
Build Recipe
make: Exiting Directory PROJ1
However, the same makefile in gmake 4.0 does something unexpected:
make -C PROJ1 build
make: Entering directory 'PROJ1'
make: *** No rule to make target 'Build'. Stop.
make: Leaving directory 'PROJ1'
Strange. For some reason it is trying to make 'Build' rather than 'build'. Now, if we try to make clean, then in both 3.8 and 4.0 we get the following:
testmake>make -C PROJ1 clean
make: Entering directory 'PROJ1'
Clean Recipe
make: Leaving directory 'PROJ1'
Which is the desired behaviour. One thing i noticed is that this affects every target where there is a directory with a name differing only by case - and we can demonstrate this by creating a directory "Clean":
.
./Build
./Clean
./PROJ1
./PROJ1/Makefile
make -C PROJ1 clean
make: Entering directory 'PROJ1'
make: *** No rule to make target 'Clean'. Stop.
make: Leaving directory 'PROJ1'
What is going on, and how can I resolve this?
Interestingly, gmake 4.2.1 running in cygwin does not exhibit the crazy behaviour - it correctly executes the build or clean recipe as requested.