Musical group I observed in testament (5)
I believe the answer is:
nonet
'musical group' is the definition.
(group of nine musicians)
'i observed in testament' is the wordplay.
'i' becomes 'one' (Roman numeral for one).
'observed in' is an insertion indicator.
'testament' becomes 'nt'.
'one' put into 'nt' is 'NONET'.
(Other definitions for nonet that I've seen before include "Multi-figure composition" , "Musical work for a set number of performers" , "Instrumental group of nine players" , "Piece for nine performers" , "Composition for nine instruments" .)