It is a kind of ellipsis. The meaning is ** it is time that is spent away from**. So it is a restrictive relative clause acting as an adjective. You may drop that is in such a construction without changing the meaning, but you must drop both words. You then have a past participle introducing an adjectival phrase modifying the preceding noun.
EDIT IN RESPONSE TO COMMENT
As was correctly implied by Weather Vane in his comments, (a) and (b) are incomplete.
(However, I disagree somewhat with WV that there is any difference in the grammatical function of spent in the phrases is spent and was spent. In both cases, spent is a passive participle. In both cases, it can be described as being used either as an adjective or else as part of a passive verbal phrase. I see as yet no rationale for saying that a change in tense of be eliminates the passive voice in one case but not the other.)
In (b), we have a form of ellipsis that is not grammatical. You can drop is and get the proper ellipsis of (c). Or you can insert that before is to complete the relative clause. In that sense, (b) is incomplete.
In (a), we have a proper structure for an ellipsis. I can properly say I don't like the dog barking to mean I don't like the dog that is barking. Notice that we have an ellipsis involving a dog that is doing something. The verb is in the active voice. But the meaning of your example does not involve time doing anything. So although the form of ellipsis is acceptable, its active voice makes absolutely no sense. Notice that when WV completed the ellipsis properly, he did so by adding you to justify the active voice. In this sense, (a) is incomplete.