FULL PRODUCT VERSION :
java version "1.8.0_05"
Java(TM) SE Runtime Environment (build 1.8.0_05-b13)
Java HotSpot(TM) 64-Bit Server VM (build 25.5-b02, mixed mode)

ADDITIONAL OS VERSION INFORMATION :
Linux 3.4.69-desktop-1.mga2 #1 SMP Sat Nov 16 17:32:02 UTC 2013 x86_64 x86_64 x86_64 GNU/Linux

A DESCRIPTION OF THE PROBLEM :
The JLS8 chapter 15.12.2.2 describes that an explicitly-typed lambda should be considered not pertinent to applicability if at least one of the return expressions is not pertinent to applicability. If an explicitly-typed lambda returns some implicitly-typed lambda, it sometimes behaves like it is considered pertinent to applicability anyway, for example if the implicitly-typed lambda is returned from inside an if-statement.

ADDITIONAL REGRESSION INFORMATION:
java version "1.8.0_05"
Java(TM) SE Runtime Environment (build 1.8.0_05-b13)
Java HotSpot(TM) 64-Bit Server VM (build 25.5-b02, mixed mode)

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Compile the test case supplied.

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
Compilation was expected to fail.
ACTUAL -
Compilation succeeded.

REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
public class Test {

interface A {
B m(int a, int b);
}

interface C {
String m(int a, int b);
}

interface B {
int m(int c);
}

public static void method(A a) {
System.out.println("Method 1");
}
public static void method(C c) {
System.out.println("Method 2");
}

public static void main(String[] args) {
// This succeeds
method((int a, int b) -> {
if(a < b)
return c -> a + b + c;
else
return c -> a + b + c;
});

/*But this fails (as expected)
method((int a, int b) -> {
return c -> a + b + c;
});*/
    }
}
---------- END SOURCE ----------