The Co-Operative Group and developers, Dalehead Properties, want to demolish an old fire station on Station Road, Haworth, Bradford, and replace it with a food store.
The site is close to, but not inside, the Haworth Conservation Area, and is bordered by homes and railway sidings.
Planning officers took the view that the fire station building itself had "no merit" and the development would have no impact on the setting of the Grade II-listed railway station.
But they accepted that the project "may impact" views of nearby Bridgehouse Mills, also a Grade II listed building.
Dalehead said that any harm to the conservation area and heritage assets would be "negligible" or "minimal" and City of Bradford Metropolitan District Council granted planning permission in March.
However, Judge Belcher last week upheld a judicial review challenge to the decision brought by objector, James Hall and Company Limited.
The main body of the officer's report on which the council's Area Planning Panel based its decision included "no consideration" of the development's impact on the conservation area, she said.
"There is no mention at all about heritage assets, no information about or assessment of the heritage assets and no indication of there being any duty to consider the Haworth Conservation Area or its setting," she added.
The judge said there are only three categories of harm recognised in the National Planning Policy Framework - substantial harm, less than substantial harm and no harm at all.
She added: "There is no intermediate bracket at the bottom end of the less than substantial category of harm for something which is limited, or even negligible, but nevertheless has a harmful impact."
The harm to the conservation area which the developers had characterised as insignificant therefore stood to be considered as "less than substantial," she said.
Judge Belcher went on to rule that, in reality, it was the officers, rather than councillors, who had taken the decision to grant planning consent.
"What has happened here is that officers have made the decision and, in effect, withdrawn it from the Area Planning Panel," she ruled.
"By failing to make any mention of it in the officer's report, it cannot be said that the Area Planning Panel has, by implication, agreed with the conclusions of the officers."
She added: "The evaluation of harm was ultimately a matter for the Area Planning Panel, having been furnished with the necessary information by the planning officers.
"In this case, the Area Planning Panel was furnished with no necessary information and was in no position to assess whether there was any harm, or to carry out the balancing exercise of any harm found against the public benefits of the development."
Other subsidiary grounds of challenge put forward by the objector were also upheld and the planning permission was quashed.
R on the Application of James Hall and Company Limited v City of Bradford Metropolitan Borough Council. Case Number: CO/1863/2019