There is nothing wrong as far as the Islamic Shari`ah is concerned to celebrate Islamic occasions as long as they do not include anything haram such as unlawful mixing between males and females. Such celebration is a kind of remembrance of Allah’s bounties on His servants, which is a praiseworthy behavior recommended by Allah Almighty.
The eminent Muslim scholar, Sheikh Yusuf Al-Qaradawi, states: Some Muslims maintain that celebrating any Islamic occasion is forbidden; they consider celebrating occasions such as the Prophet’s Hijrah to Madinah, Al-Isra’ wal-Mi`raj (the Prophet’s Night Journey and Ascension), the Prophet’s birthday, the Battle of Badr, the Conquest of Makkah, and other Islamic occasions recorded in the Prophet’s biography to be bid`ah (innovation), which is a sign of going astray and, thus, a way to hellfire. But it is not absolutely so. There are certain restrictions that render such celebrations haram (forbidden); this is, if they include any haram activities or any practice that goes against the teachings of Shari`ah, such as what happens in some countries where people undertake odd practices in celebrating birthdays of the Prophet (peace and blessings be upon him), awliya’ (closest worshipers to Allah), and other righteous people.
However, there is nothing wrong in making use of such an occasion as the Prophet’s birthday to remember and remind people of the great personality of the Prophet (peace and blessings be upon him), his honourable biography, and his true message that has been revealed to him by Allah Almighty as a mercy for the worlds. How can this be considered a bid`ah?
Celebrating Islamic occasions is a way to remind people of the great bounties Allah has showered on them, and this is not only permissible, but also recommendable and praiseworthy. Allah Almighty has commanded His servants to remember such occasions, as He says, (O ye who believe, Remember Allah’s favor unto you when there came against you hosts, and We sent against them a great wind and hosts ye could not see. And Allah is ever Seer of what ye do. When they came upon you from above you and from below you, and when eyes grew wild and hearts reached to the throats, and ye were imagining vain thoughts concerning Allah.) (Al-Ahzab 33: 9-10)
this Qur’anic verse reminds Muslims of the Battle of Al-Ahzab, when the Quraysh, the Ghatafan, and their allies attacked the Prophet (peace and blessings be upon him) and his followers, and besieged Madinah in an attempt to get rid of the Muslims altogether. Then Allah Almighty supported the Muslims and rescued them from the anti-Islam schemes. Allah Almighty sent great winds and soldiers from among the angels to fight against the disbelievers. It is an order from Allah Almighty to Muslims not to forget that. Therefore, there is a divine order for Muslims to remember such occasions that record Allah’s great favors on them.
Allah Almighty, in another verse, says, (O ye who believe! Remember Allah’s favor unto you, how a people were minded to stretch out their hands against you but He withheld their hands from you; and keep your duty to Allah. In Allah let believers put their trust) (Al-Ma’idah 5: 11). Here Allah reminds the Muslims of the wicked scheme against the Prophet (peace and blessings be upon him), when the Jewish Tribe Banu Qaynuqa` tried all possible procedures to assassinate the Prophet (peace and blessings be upon him). They plotted, but Allah countered their plots and saved the Prophet (peace and blessings be upon them). Allah Almighty says, (… they plot, but Allah (also) plotteth; and Allah is the best of plotters.) (Al-Anfal 8: 30)
Therefore, we can see that talking about Allah’s favors and celebrating them is a praiseworthy act, so as to remember Allah’s Grace and remind Muslims of the Islamic occasions, that they can learn moral lessons from and make use of them. There is really nothing wrong in that, as it has no sign of innovation or heresy in religion.