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The presence of the heavily armed terrorists was reported by the villagers near Assan temple in the Bhattal area of Khour, they said.
Officials said that a few gunshots were heard in the forward village when an Army ambulance was passing through.
Army troops along with the police have cordoned off the village and adjoining areas and an operation is underway to trace and neutralize the terrorists who are believed to have infiltrated from across the border, the officials said.