Sahih Al Bukhari – Book of Dealing With Apostates

Volume 009, Book 084, Hadith Number 060. 
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Narrated By Anas bin Malik RA: A Jew passed by Allah's Apostle PBUH and said, "As-Samu 'Alaika." Allah's Apostle said in reply, "We 'Alaika." Allah's Apostle then said to his companions, "Do you know what he (the Jew) has said? He said, 'As-Samu 'Alaika.'" They said, "O Allah's Apostle! Shall we kill him?" The Prophet, said, "No. When the people of the Book greet you, say: 'Wa 'Alaikum.'