Why Extension Method behaves different?

Question

Derived class contains a "Count" method which perform some actions on class "Derived".On the other hand i have an Extension Method which is also targets the class "Derived".

Derived derived = new Derived();
derived.Count();

By calling above snippet will execute "Count" method inside the derived class. Why C# compiler not warns and identify the Extension Method in this situation. How framework internally handling this?

//Base class
public class Base
{
    public virtual string Count()
    {
        return string.Empty;
    }
}

//Derived class
public class Derived : Base
{
    public override string Count()
    {
        return base.Count();
    }
}

//Extension Methods for Derived class
public static class ExtensionMethods
{
    public static Derived Count(this Derived value)
    {
        return new Derived();
    }
}

Answer 1

The spec (§7.6.5.2) explicitly says that instance methods take priority over extension methods:

if the normal processing of the invocation finds no applicable methods, an attempt is made to process the construct as an extension method invocation.

...

The preceding rules mean that instance methods take precedence over extension methods, that extension methods available in inner namespace declarations take precedence over extension methods available in outer namespace declarations, and that extension methods declared directly in a namespace take precedence over extension methods imported into that same namespace with a using namespace directive. For example:

If an instance method matches the parameters passed, extension methods aren't even considered.