Item seen on Princess, perhaps, or individual in Court (7)
I believe the answer is:
coronet
'item seen on princess perhaps' is the definition.
(a coronet might be worn by a princess)
'or individual in court' is the wordplay.
'individual' becomes 'one' (an individual is one person).
'in' means one lot of letters goes inside another.
'court' becomes 'ct' (abbreviation used in road names).
'or'+'one'='orone'
'orone' going inside 'ct' is 'CORONET'.
(Other definitions for coronet that I've seen before include "sign of rank" , "Jewelled circlet for the head" , "Circular floral head decoration" , "jewelled headdress" , "mark of noble rank?" .)