Step 1: Understanding the Question:
• The question asks in which source the term 'Hindustan' for India was first used in the third century AD.
Step 2: Detailed Explanation:
• The term 'Hindustan' is first attested in the third-century Sassanian (Sasanian Persian) inscriptions, which used the name for the Indian region.
• The Aihole inscription (Pulakeshin II) belongs to the 7th century and the Rabatak inscription (Kushana, Bactrian language) to the 2nd century and neither is the first use of this term.
Step 3: Final Answer:
The correct option is (A) Sassanian inscription.