Recently in a interview I was explaining about a framework that i have worked on. I said that we created a inversion of control by providing extensiblity using template method design pattern. I said this was an example of Inversion of Control where our framework was calling the methods implemented by the user of framework, to which interviewer said that a template method design pattern is not an example of IOC. I wonder if my understanding of IOC is incorrect ?
Your interviewer was wrong. The template method pattern does use inversion of control. In fact, the Wikipedia entry specifically mentions it.
http://en.wikipedia.org/wiki/Template_method_pattern
The template method is used in frameworks, where each implements the invariant parts of a domain's architecture, leaving "placeholders" for customisation options. This is an example for inversion of control, also called the Hollywood principle.
Unfortunately, you either didn't understand IoC or the Template method pattern well enough to explain to them why it was an example of IoC. Unfortunately, many people seem to think IoC means Dependency Injection, and that's it.