Honour to receive Oscar for musical instrument (4)
I believe the answer is:
oboe
'for musical instrument' is the definition.
(oboe is a kind of musical instrument)
'honour to receive oscar' is the wordplay.
'honour' becomes 'OBE' (Order of the British Empire).
'to receive' is an insertion indicator.
'oscar' becomes 'O' (phonetic alphabet: alpha, bravo, charlie etc.).
'obe' placed around 'o' is 'OBOE'.
(Other definitions for oboe that I've seen before include "Reed instrument" , "Musical instrument" , "issuer of notes" , "Source of music" , "bit of wind" .)