To use the matte in Adobe Premiere Pro I have to follow the points given below:

(1) While selecting the Project format, I should select the “Video for windows” instead of the usual DV format
(2) V1=Background , V2=Video file V3=Matte. To obtain the desired result, we have to select Matte Luma under the track matte key video effect instead of Matte Alpha which is often used.

I want to know why? The above following have to be selected instead of what has been used by us very often.

Please note the pshop mattes are flattened and saved as PSD file for importing into premiere pro.

Thanks in advance..