Step 1: Use the formula for relative velocity.
When two velocities are perpendicular (normal to each other), the magnitude of the relative velocity \( V_{AB} \) of A with respect to B is given by:
\[
V_{AB} = \sqrt{V_A^2 + V_B^2}.
\]
Step 2: Conclusion.
Thus, the relative velocity of A with respect to B is \( \sqrt{V_A^2 + V_B^2} \), corresponding to option (C).