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The term neighbourhood can be described as the sub-divisions of urban or rural settlements. In its purest definition, a neighborhood is the vicinity in which people live. This study attempts to evaluate the applicability of neighborhood as a planning unit in the process of City planning and brings forth the morphology of human settlements and process of their urban transformations. These manifestations establish the sense of identity of the precinct in the contemporary urban context. Neighborhood, as a unit of planning, can serve as a means to organize and ensure application of such decentralized planning processes to implement local planning programs and policies at the desirable de-centralized level.