Imaam Suyuti writes in Al Hawi li al fatawi:
The Sheikh of Islam and hadith master of his age, Ahmad ibn Hajar (Asqalani) was asked about the practice commemorating the birth of the Prophet (May the Peace and Blessing of Allah be Upon Him), and gave the following written reply: “As for the origin of the practice of commemorating the Prophet’s birth (May the Peace and Blessing of Allah be Upon Him), it is an innovation that has not been conveyed to us from any of the pious early Muslim (Salafus Saleh) of the first three centuries, despite which it has included both features that are praiseworthy and avoids those that are not. If one takes care to include a commemoration only things that are praiseworthy and avoids those that are otherwise, it is a praiseworthy innovation, while if one does not, it is not.” (End of Ibn Hajar Asqalani’s statement.)
Imaam Suyuti continues in his own words:
An authentic primary textual basis from the which its legal validity I inferable has occurred to me, namely the rigorously authenticated (Sahih) hadith collections of Bukhari and Muslim that ‘The Prophet (May the Peace and Blessing of Allah be Upon Him) came to Medinah and found the Jews fasting on the tenth of Muharram (Ashura), so he asked them about it and they replied, “ it is the day on which Allah drowned Pharaoh and rescued Moses, so we fast in it, in thanks to Allah the Most High,”
Speaking about the above hadith Imaam Suyuti says,
Which indicates the validity of giving thanks to Allah for blessings He has bestowed on a particular a benefit or averting affliction, repeating one’s thanks on the anniversary of that day every year, giving thanks to Allah taking any kind of various forms of worship such as prostration, fasting, giving charity, or reciting the Quran. And what blessing is greater than the birth of the Prophet (May the Peace and Blessing of Allah be Upon Him), the Prophet of Mercy, on this day? In the light of which, one should take care to commemorate it on the day itself in order to conform to the above story of Moses and the tenth of Muharram, though those who do not view the matter thus do not mind commemorating it on any day of the month, while some have expanded the time to any day of the year, wherever exception may be taken at such a view.
The foregoing is in regard to its legal basis. As for what is therein, it should be confined to the expresses thanksgiving to Allah Most High, of the like of the above –mentioned practices such as reciting the Quran, feeding others, giving charity, and singing something of the odes that praise the Prophet (May the Peace and Blessing of Allah be Upon Him) or encourage one to do with less of this-worldly things, inspiring the hearts of the listeners to do good and to work for the hereafter. As for what is added to this, of singing to singing, amusement, and so forth, what should be said of it is that the permissible therein that displays rejoicing over the day is of no harm if conjoined with it, while what is unlawful, offensive, or unpraiseworthy (khilaf al-awla) is forbidden.”