Commercial buildings consume significant portion of electricity in developed countries and air conditioning systems account for bulk demand within the buildings. These air conditioning systems handle large volumes of air and can be utilized effectively as thermal energy storage. This work is focussed on providing Demand Response (DR) ancillary service by adjusting electricity demand from air conditioning system according to grid requirements, considering occupant preferences for additional revenue. First, detailed component-wise mathematical model is developed for the air conditioning system. Subsequently, a transactive market based control algorithm including agent bidding strategies, and market clearing approach is proposed. The proposed control is designed considering the general requirements of the Energy Market Authority (EMA) Singapore's DR programme. Simulation studies are carried out and results show that proposed transactive control is effective in normal operating conditions as well as providing DR services according to market price signals. © 2020 IEEE.