"Courtesy [was] extended" - how does adding or removing "was" affect the meaning...

The meeting was not an obligation, but a courtesy extended by both parties.

Is this sentence correct? I think "was extended.." in place of "extended" will fit.

This is an example of a form of ellipsis called whiz-deletion, where a relative pronoun and a be-verb are omitted from a sentence. The sentence without ellipsis would be:

The meeting was not an obligation, but a courtesy [that was] extended by both parties