The court admitted Dutt's plea seeking relief under Probation of Offenders Act and directed the prosecution to file a reply on February 28.
Earlier, public prosecutor Ujjwal Nikam had opposed Dutt's plea arguing that he could not be granted leniency for him being a "youthful" offender, when the crime was committed.
Nikam said the Probation of Offenders Act was meant for young and immature offenders.
Dutt, who was 34 years old in 1993, when he accepted an AK-56 rifle and a Chinese 9mm pistol from Samir Hingora, was "mature and adult", Nikam added.
Nikam contended that Dutt could then distinguish between a hunting rifle and an AK-56, "a weapon of mass destruction".
He dismissed Dutt's defence that he had acquired the AK-56, as he feared for his family's safety during the Mumbai riots following Babri Masjid demolition.
Nikam argued that Dutt rather knew people from the underworld, like Dawood Ibrahim.
Dutt was cleared of charges of conspiracy in the case. But he was booked for illegally possessing an AK-56 rifle that had come in a consignment of arms and explosives meant for use in the Mumbai serial blasts that killed 257 people.