Quoting a JeM statement, local news agency GNS said Talha Rasheed, nephew of Azhar, was among the three militants killed in the gunfight with security forces in Aglar village of Pulwama district.
IGP Kashmir zone, Muneer Khan said: “We will ask Pakistan to collect the body of Masood Azhar’s nephew as JeM has owned it. The matter will be taken up through proper channels.”
Besides the three militants, army soldier Sham Sunder of 44 Rashtriya Rifles (RR) was killed in the gun battle.
Two other soldiers and a civilian were also injured in the operation that has ended, police said.
The militants had attacked a police check-post in Rajpora on Saturday.
Following intelligence inputs about the presence of militants, troops of the 44 RR, Special Operations Group (SOG) of state police and the Central Reserve Police Force (CRPF) had surrounded the village on Monday evening.
As the cordon was being tightened, the hiding militants fired at the joint team of security forces. The gunfight started late on Monday evening.
The civilian injured is Showkat Ahmad, who along with other protesters had clashed with security forces to disrupt the operation against the hiding militants.
Three weapons, including one Kalashnikov, one M16 rifle and one pistol, besides ammunition were recovered from the encounter site, said a police spokesman.
Internet services have been suspended in Pulwama district to check the spread of rumours.