I am planning to publish an open source tool at github under MIT license. This tool itself uses another tool published at codeplex under Ms-Pl license. What is the proper way of giving appropriate credits (either in my application or source code) about using other tool from codeplex? Do I need to create any readme type of file that should mention other tool?
The Microsoft Public License requires that:
(C) If you distribute any portion of the software, you must retain all copyright, patent, trademark, and attribution notices that are present in the software.
which should be self-explanatory. Also, giving an attribution notice to the author in your README can't hurt.
The more important clause is:
(D) If you distribute any portion of the software in source code form, you may do so only under this license by including a complete copy of this license with your distribution. ...
By itself, this seems to be a GPL-like copyleft, but the Microsoft Reciprocal License has such a clause, which allows us to interpret the Ms-PL in context.
(A) Reciprocal Grants- For any file you distribute that contains code from the software (in source code or binary format), you must provide recipients the source code to that file along with a copy of this license, which license will govern that file. You may license other files that are entirely your own work and do not contain code from the software under any terms you choose.
From this clause, we can note immediately that the Ms-PL doesn't require a licensee to publish the source code of executables it distributes, and allows linking from other licenses. So one option might be to distribute executables only, and link to them.
If you do choose to publish the source code, on the other hand, it must be under the Ms-PL. But unlike the Ms-RL, the Ms-PL makes no claims to your code. I gather that you are allowed to circumvent the weak copyleft (which, indeed, the FSF notes is weak) by making modifications. The Ms-PL is listed as a Copyfree license, and one standard of Copyfree is that there must be no conditions that apply to derivative works.
3. Free Modification and Derivation
A copyfree license does not place any restrictions on the modification of -- and derivation from -- the licensed material external to the license itself, and protects recipients of the material from such restrictions except insofar as explicit individual contractual agreements may be concerned.
However, I think your safest choice is to license your entire program under the Ms-PL, in which case you have nothing to worry about in distributing either the tool's source code or binaries. You state that you want to use the MIT License. The Ms-PL is about as permissive as the MIT License, but it also protects users against patent treachery in section 3(B). And, as we have noted, the weak copyleft can probably be easily circumvented, so the licenses should have the same practical effect.
More good answers at this question.