The discussion is in Chapter 53 Identity and Non-Identity from The Gospel of Buddha, compiled by Paul Carus.
Kutadanta: I am told you are the Buddha,
the Holy One, the All-knowing, the Lord of the World.
But if you were the Buddha,
would you not come like a king
in all your glory and power?
Buddha: Your eyes are hindered.
If the eye of your mind were undimmed
you could see the glory and the power of truth.
Kutadanta: Show me the truth and I shall see it.
Your doctrine, however, is without consistency.
If it were consistent, it would stand;
but as it is not, it will pass away.
Buddha: The truth will never pass away.
Kutadanta: I am told that you teach the law,
yet you tear down religion.
Your disciples despise rites and abandon immolation,
but reverence for the gods can be shown only by sacrifices.
The very nature of religion consists in worship and sacrifice.
Buddha: Greater than the immolation of bullocks is the sacrifice of self.
He who offers to the gods his evil desires
will see the uselessness of slaughtering animals at the altar.
Blood has no cleansing power,
but the eradication of lust will make the heart pure.
Better than worshipping gods
is obedience to the laws of righteousness.
Kutadanta: You believe that beings are reborn,
that they migrate in the evolution of life,
and that subject to the law of karma we must reap what we sow.
Yet you also teach the non-existence of the soul!
Your disciples praise utter self-extinction
as the highest bliss of Nirvana.
If I am merely a combination of the sankharas,
my existence will cease when I die.
If I am merely a compound of sensations and ideas and desires,
where can I go at the dissolution of the body?
Buddha: O Brahman, you are religious and earnest.
You are seriously concerned about your soul.
Yet your work is in vain because you are lacking
in the one thing that is needful.
There is rebirth of character,
but no transmigration of a self.
Your thought-forms reappear,
but there is no ego-entity transferred.
The stanza uttered by a teacher
is reborn in the student who repeats the words.
Only through ignorance and delusion do men indulge in the dream
that their souls are separate and self-existent entities.
Your heart, O Brahman, is still cleaving to self;
you are anxious about heaven,
but you seek the pleasures of self in heaven,
and thus you cant not see the bliss of truth
and the immortality of truth.
I have not come to teach death, but to teach life,
and you do not discern the nature of living and dying.
This body will be dissolved
and no amount of sacrifice will save it.
Therefore, seek the life that is of the mind.
Where self is, truth cannot be;
When truth comes, self will disappear.
Therefore, let your mind rest in the truth;
propagate the truth, put your whole will in it, and let it spread.
In the truth you shall live forever.
Self is death and truth is life.
The cleaving to self is a perpetual dying,
while moving in the truth
is partaking of Nirvana
which is life everlasting.
Kutadanta: Where, O venerable Master, is Nirvana?
Buddha: Nirvana is wherever the precepts are obeyed.
Kutadanta: Do I understand you correctly that Nirvana is not a place,
and being nowhere it is without reality?
Buddha: You do not understand me correctly. Now listen and answer these questions:
Where does the wind dwell?
Buddha: Then, sir, there is no such thing as wind!
Buddha: Answer me, O Brahman, where does wisdom dwell?
Is wisdom a locality?
Kutadanta: Wisdom has no allotted dwelling-place.
Buddha: Do you mean there is no wisdom,
no enlightenment, no righteousness, and no salvation,
because Nirvana is not a locality?
As a great and mighty wind
which passes over the world
in the heat of the day,
so the Tathagata comes to blow
over the minds of mankind
with the breath of his love,
so cool, so sweet, so calm, so delicate;
and those tormented by fever assuage their suffering
and rejoice at the refreshing breeze.
Kutadanta: I feel, O Lord, that you proclaim a great doctrine,
but I cannot grasp it.
Forbear with me that I ask again:
Tell me, O Lord, if there be no atman,
how can there be immortality?
The activity of the mind passes,
and our thoughts are gone
when we have done thinking.
Buddha: Our thinking is gone,
but our thoughts continue.
but knowledge remains.
Kutadanta: How is that? Is not reasoning and knowledge the same?
Buddha: It is as when a man wants,
during the night, to send a letter,
and, after having his clerk called,
has a lamp lit, and gets the letter written.
Then, when that has been done, he extinguishes the lamp.
But though the writing has been finished
and the light has been put out the letter is still there.
Thus does reasoning cease and knowledge remain;
and in the same way mental activity ceases,
but experience, wisdom, and all the fruits of our acts endure.
Kutadanta: Tell me, O Lord, pray tell me,
where, if the sankharas are dissolved, is the identity of my self?
If my thoughts are propagated, and if my soul migrates,
my thoughts cease to be my thoughts
and my soul ceases to be my soul.
Give me an illustration, but pray, O Lord,
tell me, where is the identity of my self?
Buddha: Suppose a man were to light a lamp;
would it burn throughout the night?
Kutadanta: Yes, it might do so.
Buddha: Now, is it the same flame that burns
in the first watch of the night as in the second?
Kutadanta: (hesitates) No, it is not.
Buddha: Then is there more than one flame, one in the first watch
and the other in the second watch?
Kutadanta: No, sir. In one sense it is not the same flame,
but in another sense it is the same flame.
It burns the same kind of oil,
it emits the same kind of light,
and it serves the same purpose.
Buddha: Very well And would you call those flames
the same that have burned yesterday
and are burning now in the same lamp,
filled with the same kind of oil,
illuminating the same room?
Kutadanta: They may have been extinguished during the day.
Buddha: Suppose the flame of the first watch
had been extinguished during the second watch,
would you call it the same if it burns again in the third watch?
Kutadanta: In one sense it is a different flame,
in another it is not.
Buddha: Has the time that elapsed during the extinction of the flame
anything to do with its identity or non-identity?
Kutadanta: No, sir, it has not.
There is a difference and an identity,
whether many years elapsed or only one second,
and also whether the lamp
has been extinguished in the meantime or not.
Buddha: Well, then, we agree that the flame of today
is in a certain sense the same as the flame of yesterday,
and in another sense it is different at every moment.
Moreover, the flames of the same kind,
illuminating with equal power the same kind of rooms
are in a certain sense the same.
Kutadanta: Yes, sir.
Buddha: Now, suppose there is a man
who feels like yourself, thinks like yourself,
and acts like yourself, is he not the same man as you?
Kutadanta: No, sir.
Buddha: Do you deny that the logic which holds good for yourself
also holds good for the things of the world?
Kutadanta: (hesitates) No, I do not.
The same logic holds good universally;
but there is a peculiarity about my self
which renders it altogether different
from everything else and also from other selves.
There may be another man who feels exactly like me,
thinks like me, and acts like me;
he may even have the same name
and the same kind of possessions,
but he would not be myself.
Buddha: True, Kutadanta, he would not be yourself.
Now, tell me, is the person who goes to school the same person
when he finishes his schooling?
Is it one who commits a crime, another
who is punished by having his hands and feet cut off?
Kutadanta: They are the same.
Buddha: Then sameness is constituted by continuity only?
Kutadanta: Not only by continuity,
but also and mainly by identity of character.
Buddha: Very well, then you agree that persons can be the same,
in the same sense that two flames of the same kind are called the same;
and you must recognize that in this sense
another man of the same character
and product of the same karma
is the same as you.
Kutadanta: Well, I do.
Buddha: And in this same sense alone are you the same today as yesterday.
Your nature is not constituted by the matter of which your body consists
but by your sankharas, the forms of the body, sensations, and thoughts.
Your person is the combination of the sankharas.
Wherever they are, you are.
Whether they go, you go.
Thus, you will recognize in a certain sense
an identity of your self, and in another sense a difference.
But he who does not recognize the identity should deny all identity,
and should say that the questioner is no longer the same person
as he who a minute later receives the answer.
Now consider the continuation of your personality,
which is preserved in your karma.
Do you call it death and annihilation,
or life and continued life?
Kutadanta: I call it life and continued life,
for it is the continuation of my existence.
But I do not care for that kind of continuation.
All I care for is the continuation of self
in the other sense - the sense that makes of every man,
whether identical with me or not,
an altogether different person.
Buddha: Very well. This is what you desire
and this is the cleaving to self.
This is your error.
All compound things are transitory:
they grow and they decay.
All compound things are subject to pain:
they will be separated from what they love
and be joined to what they abhor.
All compound things lack a self, an atman, an ego.
Kutadanta: How is that?
Buddha: Where is your self?
Buddha: Your self to which you cleave is in constant change.
Years ago, you were a small babe;
then, you were a boy;
then a youth, and now, you are a man.
Is there any identity of the babe and the man?
There is an identity in a certain sense only.
Indeed, there is more identity between the flames
of the first watch and the third watch,
even though the lamp might have been extinguished during the second watch.
Now which is your true self,
that of yesterday, that of today, or that of tomorrow,
for the preservation of which you clamour?
Kutadanta: I see my error, but I am still confused.
Buddha: It is by a process of evolution that sankharas come to be.
There is no sankhara which has sprung into being without a gradual becoming.
Your sankharas are the product of your deeds in former existences.
The combination of your sankharas is your self.
Wherever they are impressed, there your self migrates.
In your sankharas, you will continue to live
and you will reap in future existences
the harvest sown now and in the past.
Kutadanta: Verily, O Lord, this is not a fair retribution.
I cannot recognize the justice that others after me will reap
what I am sowing now.
Buddha: Is all my teaching in vain?
Do you not understand that those others are you yourself?
You yourself will reap what you sow, not others.
Think of a man who is ill-bred and destitute,
suffering from the wretchedness of his condition.
As a boy he was slothful and indolent, and when he grew up
he had not learned a craft to earn a living.
Would you say his misery
is not the product of his own action,
because the adult is no longer the same person as was the boy?
Thus, I say to you:
Not in the heavens,
not in the midst of the sea,
not if you hide yourself away in the clefts of the mountains,
will you find a place where you can escape the fruit of your evil actions.
At the same time, you are sure
to receive the blessings of your good actions.
The man who has long been travelling and who returns home in safety,
the welcome of kinsfold, friends, and acquaintances awaits.
In the same way, the fruits of his good works bid him welcome
who has walked in the path of righteousness,
when he passes over from the present life into the hereafter.
Kutadanta: I have faith in the glory and excellency of your doctrines.
My eye cannot as yet endure the light;
but I now understand that there is no self,
and the truth dawns upon me.
Sacrifices cannot save, and invocations are idle talk.
But how shall I find the path to life everlasting?
I know all the Vedas by heart and have not found the truth.
Buddha: Learning is a good thing; but it avails not.
True wisdom can be acquired by practice only.
Practise the truth that your brother is the same as you.
Walk in the noble path of righteousness
and you will understand that while there is death in self,
there is immortality in truth.
Kutadanta: Let me take my refuge in the Blessed One,
in the Dharma, and in the brotherhood.
Accept me as your disciple
and let me partake of the bliss of immortality.
Does anyone know where this discussion comes from?