The correct option is B Both A and R are true but R is not the correct explanation of A
Sponges have cellular level of organisation as the body is composed of cells and cells do not group and form tissues.
Division of labour does exist in sponges as different types of cells perform different functions independently.
Sponges have cellular level of organization because of the absence of tissues and not because of the presence of division of labour. So, both A and R are true, but, R is not the correct explanation of A.