The court, which heard the appeal on Wednesday, said it was swayed into reinstating the point because of the "huge efforts" Beitar was making to combat its own fans' racist behaviour.
The punishment, which now stands at two suspended points for the current season and next season, was imposed after Beitar fans chanted anti-Arab slogans at two league fixtures earlier this year against Hapoel Tel Aviv and Hapoel Ramat Gan.
The appeals court also said a 60,000 shekel (approx. $17,400) fine that was imposed in the original sentence should go towards funding efforts to combat racism in football.
Beitar have the worst disciplinary record in Israel's Premier League. Since 2005 they have faced more than 20 hearings and have received various punishments, including points deductions, fines and matches behind closed doors.
Beitar were Israel's richest club until three seasons ago when their main financial backer, Russian-born billionaire Arkady Gaydamak, stopped most of his funding, although he continues to own the club.
They lie in 11th place in the 16-team division with 32 points from 28 games.
The club are the only one among the leading outfits never to have signed an Israeli-Arab player because of fan pressure.
