Capability type in custom post type set and all actions for custom post type disappears?

I am stuck working with custom post types and capabilities. I have searched for 2 days and tried all kinds of code but till now there is no solution. I hope to find some help here if possible. Thank you for your time!

If I manually define the capabilities using the array instead of capability type, admin can edit and modify or publish the custom post type and all actions (Edit, Quick Edit, Trash, View) appears on the custom post type rows. However if i use capability_type=>'custom_post_type', only View action is available and I am unable to edit or publish posts.

Checking the dump of WP_USER as admin shows me the admin has all the edit_custom_post_type, publish_custom_post_type capabilities.

Anyone possible to shed some light on this? Thanks for the help and time.