Chrome 'Extensions' greyed out

If I open Chrome from desktop I can see:

Katalon Recorder (Selenium IDE for Chrome) 3.1.2 extension is installed and in use.

But when I Run testcase (Chrome is being controlled by automated test software):

Chrome > More Tools > Extensions is greyed out.

If I run Spy web > Spy object (active browser)
> new tab / new Chrome instance is opened and I can see the red highlights in it but ALT+` does not work.

Something must be wrong on my setup?

Please help.