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I have read many articles but i cannot be confirmed if linked server is supported in SQL Azure DB(PAAS)environment? I read somewhere that it is applicable only in hybrid environments. Can anyone please confirm if linked server can be used with databases in azure and not just in hybrid?

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Linked server are not supported in SQL Azure; you can only create a linked server in an on-premise SQL Server to a SQL Azure database.

reference link : https://social.technet.microsoft.com/Forums/en-US/1943b51b-151d-4510-9bbd-ceb6b51bde3b/sql-azure-linked-data-base

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