Collaborative learning is the favored approach educators use to inculcate social skills and promote peer interactions in students. Embedded Systems is a compulsory Electronics and Communication Engineering and Electrical Engineering course, which solves real-time problems. The collaborative learning approach compliments the learning style needed for this course. The inclusion of teaching-learning tools based on Augmented Reality (AR) offers more space for educators to implement a collaborative learning approach in their classroom. The research aims to analyze the impact of AR-based collaborative learning activity on the learners' knowledge gain and collaborative skills while undergoing an embedded system course. A total of 78 first-year engineering students divided into two groups (traditional style and AR-based) participated in a "Think-Pair-Share" collaborative activity to complete a predefined task of the embedded system course. The AR-based collaborative activity group used Augmented Reality Interactive Tabletop (ARITE) to understand and explore the embedded system concepts. A pre-test and post-test were conducted with both groups to evaluate the gain in knowledge and assessment of collaborative skills done using a survey questionnaire. The experimental results showed that AR technology played a crucial role in enhancing learners' knowledge gain and social skills using the ARITE system through a collaborative learning activity compared to traditional learning group students. At the same time, no change in positive interactions between students of two groups was observed, which means that collaborative learning promotes peer interaction irrespective of the use of technology. Future work will focus on assessing the learners' critical thinking and systematic abilities (leadership, teamwork), which may be necessary to become employable.