Is it permissible to respond with "Wa alaikum assalam" (and upon you be peace) to the greeting "Sabah/Masa' al-khair" (Good morning/evening), acting upon the noble verse: "And when you are greeted with a greeting, greet in return with one better than it, or (at least) return it equally"?

The motto of this Ummah in greetings is "peace" (Al-Salam). Initiating any greeting other than it, such as "good morning," is not from the guidance of our Sharia (definition), and it does not deserve to be returned in kind. However, if a Muslim responds to it with the Islamic greeting, that is good, based on the Almighty's saying: (And when you are greeted with a greeting, greet in return with one better than it, or [at least] return it [in a like manner]). As for initiating with "peace be upon you" (Al-Salam Alaykum) along with "good morning," there is no harm in it. But if one restricts oneself to "good morning" without the greeting of peace, then he has acted improperly.