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Śrīmad-Bhāgavatam
[Canto 5, Ch. 11]
are in the Vaikuṇṭha  jagat , the spiritual world, and they never fall into the material world. Those in the material world are conditioned souls,  nitya-baddha . The  nitya-baddhas  can become liberated by controlling the mind because the cause of conditioned life is the mind. When the mind is trained and the soul is not under the mind's control, the soul can be liberated even in this material world. When it is liberated, one is called  jīvan-mukta . A  jīvan-mukta  knows how he has become conditioned; therefore he tries to purify himself and return home, back to Godhead. The eternally conditioned soul is eternally conditioned because he is controlled by the mind. The conditioned state and liberated state are compared to the sleeping, unconscious state and the awakened state. Those who are sleeping and unconscious are eternally conditioned, but those who are awake understand that they are eternally part and parcel of the Supreme Personality of Godhead,  Kṛṣṇa . Therefore even in this material world, they engage in  Kṛṣṇa 's service. As confirmed by Śrīla Rūpa Gosvāmī:  īhā yasya harer dāsye . If one takes to  Kṛṣṇa 's service, he is liberated, even though he appears to be a conditioned soul within the material world.  Jīvan-muktaḥ sa ucyate . In any condition, one is to be considered liberated if his only business is to serve  Kṛṣṇa .
TEXTS 13-14
क्षेत्रज्ञ आत्मा पुरुषः पुराणः 
        साक्षात्स्वयंज्योतिरजः परेशः । 
        नारायणो भगवान् वासुदेवः 
        स्वमाययाऽऽत्मन्यवधीयमानः ॥१३॥ 
        यथानिलः स्थावरजङ्गमाना- 
        मात्मस्वरूपेण निविष्ट ईशेत् । 
        एवं परो भगवान् वासुदेवः 
        क्षेत्रज्ञ आत्मेदमनुप्रविष्टः ॥१४॥
kṣetrajña ātmā puruṣaḥ purāṇaḥ 
        sākṣāt svayaṁ jyotir ajaḥ pareśaḥ 
        nārāyaṇo bhagavān vāsudevaḥ 
        sva-māyayātmany avadhīyamānaḥ