Ahead of the decision, council officers recommended the scheme be refused and the application garnered more than 1,700 objections from the public.
In their report, officers said while the development would provide much-needed housing, the loss of 16 hectares of green wedge land was “considered to be inherently harmful.”
They said proposals to relocate other well-used businesses at the centre, including a dance school, gym, taxi rank, boutique and beauty salon, were inadequate.
Mike Shirley, council portfolio holder for planning and strategic growth, said: “We were confident that refusing this application was the right thing to do in planning terms when it came before us last year.
“The harms it posed, both to established and well-used local businesses and the local community, significantly outweighed the benefits of new housing.
“We do not believe the situation has changed and we hope the government planning inspector will feel the same way.”
The inspector will now carry out an independent review of the council’s decision to ensure it was made fairly and in accordance with planning law and policy.
Hallam Land Management has been contacted for comment.