In the Kingdom Ministry of February, 2000 this question was discussed. It quoted The Watchtower of October 1, 1998, p.17 which said :
“We must remember, however, that most in the congregation are not aware of the particular circumstances that led to a person’s expulsion or to his reinstatement. In addition, there may be some who have been personally affected or hurt—perhaps even on a long-term basis—by the wrongdoing of the repentant one. Being sensitive to such matters, therefore, when an announcement of reinstatement is made, we would understandably withhold expressions of welcome until such can be made on a personal basis.”
The conclusion was that applause at the time of reinstatement would not be appropriate.
You may also be interested that on the Theocratic Ministry School and Service Meeting (and, presumably, their current counterparts) there are no rules forbidding applause if it is done spontaneously, but we normally do not applaud each presentation.
This was clarified in the Kingdom Ministry of April, 1972 and confirmed in the Kingdom Ministry of May, 2008.