diff --git a/compose/config.py b/compose/config.py
index cf831f312d..2427476f75 100644
--- a/compose/config.py
+++ b/compose/config.py
@@ -163,12 +163,12 @@ class ServiceLoader(object):
         if self.working_dir is None:
             raise Exception("No working_dir passed to ServiceLoader()")
 
-        try:
+        if 'file' in extends_options:
             extends_from_filename = extends_options['file']
-        except KeyError:
-            extends_from_filename = os.path.split(self.filename)[1]
+            other_config_path = expand_path(self.working_dir, extends_from_filename)
+        else:
+            other_config_path = self.filename
 
-        other_config_path = expand_path(self.working_dir, extends_from_filename)
         other_working_dir = os.path.dirname(other_config_path)
         other_already_seen = self.already_seen + [self.signature(service_dict['name'])]
         other_loader = ServiceLoader(