Update 2017/02/13
User interface for managing signing certificates and provisioning profiles has been changed at Xcode 8.3 beta 2.
Changed the user interface for managing signing certificates and provisioning profiles. Certificates are managed from the Accounts preferences pane by selecting a team and clicking Manage Certificates. Automatically managing signing is recommended, however if your app requires manually signing provisioning profiles are managed in the General tab of the project editor. Use the Provisioning Profile dropdown to import or download profiles. In addition it displays profiles that match the current signing configuration of the target. (28641027)
I think Its deprecated because the signing system has been rewritten in Xcode8.
The signing system has been rewritten to include a new mode for automatically managing signing assets, in addition to a dedicated manual mode where the profiles for the target must be explicitly selected. When automatically managing signing assets, Xcode will create signing certificates, update app IDs, and create provisioning profiles. For manual mode, only custom created profiles can be selected and Xcode will not modify or create any signing assets. Xcode now encodes profiles in the target using the PROVISIONING_PROFILE_SPECIFIER build setting. This setting allows specifying both the team ID and the name or identifier of the profile.
There are some Signing relate known Issues with Xcode 8.1 you should known.
So maybe we should not set Provisioning Profile in Build Setting tab, switch to General tab , and set in Signing category instead.
If you set provisioning profile in Build Setting and enable Automatically manage signing in General tab Xcode will complain about that.