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A MOSFET has its gate, source and drain on the top side [1]. These structures are sitting on top of the substrate, which is also called body or bulk. The source and drain are n-doped, while the body is p-doped.[2] There are p-n junctions between body and drain, and between bulk and source. These p-n junctions behave like diodes. If the p-doped body is at a higher potential than the n-doped source or drain, then an unwanted current will flow from body into source.
To avoid that, we need to keep the the p-n junctions reverse-biased always. We need to bias the body to a voltage that's lower than source and drain, or equal to source and drain. The cheap way to achieve that is to connect the body to the source, and design the rest of the circuit such that the source voltage always lower or equal to the drain voltage. The p-n junction between the body and the drain becomes the junction between the source and the drain. That is the body diode.
In principle, a MOSFET is a four-terminal device. Inside ICs sometimes, the MOSFET body may be connected to a voltage that's lower than source and drain, instead of connecting body to source. Discrete MOSFETs with the fourth pin for a body connection do exist, although they are rare.
If your studies lean toward VLSI design rather than discrete circuit design then you may have also learned that a MOSFET is really a 4-terminal device: gate, source, drain, and body. In VLSI design it is common to connect the bodies of all NMOS transistors to the lowest voltage in the circuit (ground, for digital circuits) and to connect the bodies of the PMOS transistors to the highest voltage in the circuit.
When MOSFETS are used as discrete devices, such as in power supplies or amplifiers, it is generally more convenient to connect the body to the source and treat the transistor as a 3-terminal device. This allows the MOSFETs to use the same packages as high-power BJT transistors and usually doesn't cause any problems. However, since the body is connected to the source a PN junction now exists between the combined body/source connection and the drain connection. In an NMOS transistor the diode's anode is the p-type body and the diode's cathode is the n-type drain. So, effectively there is a diode between the source and drain. In normal use this diode would be reverse biased.
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in my engineering curriculum .. I never found a diode in a mosfet symbol
Then you should ask for your tuition back, or perhaps the institution should want their diploma back.
but in datasheets there is a diode called as body
Right, because there is. It is possible to make such FETs without body diodes, but it is a much more expensive process.
Please explain its significance.
Other than poor teaching by the school or poor learning by you, you may be confusing formal schematics with something drawn quickly to make a different point, like an instructor might on a board in front of a class. Unless the body diode is important to the context, it is understandable for hand-drawn schematics to not include such details.
However, when creating schematic symbols in a CAD package, it makes sense to do it right. You're only creating the symbol once, and will use it many times in the future. The extra complexity of the full symbol doesn't matter since you're just including the existing symbol whole into a schematic.
In formal contexts like datasheets, it would be irresponsible to omit the details. For example, here is a snippet from the first MOSFET datasheet I happened to grab. It even included an explanation of the symbol:
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