The correct option is B False
In the most simple words, a clause is a group of words made up of a subject and a verb. These are essentials in a clause; without the subject and verb the group of words can't be called a clause. (Unless it is a part of a larger sentence that contains the same subject/verb).
The words in bold do not contain a subject nor a verb. 'Dancing' is a participle, 'in' is a preposition, 'the rain' is the object of the preposition.
Hence the statement is false and option B is correct, A is incorrect.