Explanation:

- Lakshadweep is the smallest Union Territory of India by area. It is a group of islands off the southwestern coast.

- Puducherry is a Union Territory comprising four distinct regions scattered in different parts of India, formerly French colonies.

- Dadra and Nagar Haveli and Daman and Diu is a merger of three separate areas, previously Portuguese colonies, into a single UT.

- Chandigarh serves as a Union Territory and is the shared capital of Punjab and Haryana.

Thus, the smallest Union Territory in terms of area is indeed Lakshadweep.

.