Chap keeping a jolly item of clothing (7)
I believe the answer is:
garment
'item of clothing' is the definition.
(I've seen this before)
'chap keeping a jolly' is the wordplay.
'chap' becomes 'gent' (I've seen this in other clues**).
'keeping' is an insertion indicator.
'jolly' becomes 'rm'.
'a'+'rm'='arm'
'gent' placed around 'arm' is 'GARMENT'.
(Other definitions for garment that I've seen before include "Grant me (anag.)" , "Piece of clothing" , "stole, perhaps" , "Covering" , "coat maybe" .)