According to sources, the exchange took place on Wednesday in eastern Ladakh.
The face-off comes ahead of an informal summit in October between Prime Minister Narendra Modi and Chinese President Xi Jinping in India.
According to the sources, the Chinese Army personnel objected to patrol by Indian soldiers in the Pangong Tso lake area, most of which is under Chinese control.
The issue was resolved during talks between the two sides on Wednesday, the sources said.
The face-off also comes ahead of the Indian Army holding its 'Him Vijay' exercise in Arunachal Pradesh, most of which China claims as part of Southern Tibet.
China has also voiced its disapproval of India revoking the special Astatus of Jammu and Kashmir and hiving off Ladakh, and making it into a Union Territory.
During External Affairs Minister S. Jaishankar's visit to Beijing on August 13 to firm up President Xi's visit, the Chinese Foreign Minister Wang Yi had toldJaishankar that India's announcement of the establishment of the Ladakh Union Territory, "which involves Chinese territory, posed a challenge to China's sovereignty and violated the two countries' agreement on maintaining peace and stability in the border region".
Jaishankar told Wang that the creation of Ladakh has "no implication for either the external boundaries of India or the Line of Actual Control (LAC) with China" and that "India was not raising any additional territorial claims".
Chinese forces regularly intrude into Ladakh area, and face off with Indian troops there.
( With inputs from IANS )