Active Directory User Based Policy Not working with Application Control

[aboodnet]

Dear,  I have created a specific policy, let's call it policy A" that matches a group of users in Microsoft active directory. The aim is to apply specific rules to those users. For example, full internet access but no P2P and no Youtube. Allowing or denying all traffic works fine using that policy but unfortunately adding/enabling application control is not working and simply gets ignored. 

Application control works fine for any other policies that does not have AD user included.

After heavy troubleshooting, i found out under FortiView->Sources->IP-address->Policies that it is matching two different policies. Policy A is the correct one along with another policy that permits everything (screenshot attached). I was under the assumption that when a policy match hit, Fortigate stops looking further down. Why is this happening?

Firmware version: 6.2

Device Model: 80E Thanks,