Area taking a capital letter
I believe the answer is:
parish
'area' is the definition.
(I have seen 'Ecclesiastical area' mean 'parish' so perhaps 'area' could also mean 'parish')
'a capital letter' is the wordplay.
'a capital' becomes 'Paris' (Paris is the capital of France).
'letter' becomes 'h' ().
'paris'+'h'='PARISH'
'taking' acts as a link.
(Other definitions for parish that I've seen before include "Unit of local government" , "administrative district" , "District with own church and clergyman" , "Part of diocese" , "Ecclesiastical district" .)