Lausanne: The Court of Arbitration for Sport has overturned UEFA's ban on AC Milan competing in the Europa League this season.
The court said Friday the punishment was "not proportionate" even though UEFA was right to judge Milan had broken financial monitoring rules by overspending on player transfers and wages.
UEFA must now review the case and apply a "proportionate disciplinary measure," the court said in an urgent ruling.
The verdict was given Friday without detailed reasons from a three-judge panel, one day after a hearing at the court.
The ruling was urgent because the case affected Italy's entry in the Europa League second qualifying round next week.
Milan's legal victory restores the seven-time European champion to the group stage which kicks off in September. Atalanta, which placed seventh in Serie A, goes back into the qualifying rounds and plays Sarajevo in a first-leg game in Bosnia-Herzegovina on Thursday.
Fiorentina, which placed eighth last season, is now withdrawn from the Europa League.
Milan broke UEFA's financial fair rules which monitor clubs' spending over a three-year assessment period before allowing them to enter the Champions League or Europa League.
When it was banned last month, Milan said it failed to break even on soccer-related business in the period from July 2014 to June 2017 - before its spending spree one year ago.
Milan spent more than 200 million euros last year (then nearly $250 million) on new players amid questions over the financial stability of the Chinese-led consortium that purchased the club from former Italian prime minister Silvio Berlusconi for $800 million in April 2017.
The team finished sixth in Serie A and qualified for the Europa League.
However, the court said UEFA had not "properly assessed" some relevant points in Milan's case, and the club's finances improved after a takeover last week by a hedge fund in the United States.
Elliott Management has promised to inject 50 million euros ($66 million) in capital after taking over the club.
Former owner Li Yonghong missed a deadline to repay part of a loan worth more than 300 million euros from the hedge fund. Elliott repossessed the holding company in Luxembourg that Li used to buy Milan.