From taxation point of view compensation received is to be check whether it is received for permanent disability or for temporary disability. So first check whether your client suffered permanent or temporary disability. If it is for permanent then that compensation will be consider as capital receipt and will not be taxable but if it is of temporary nature then receipt will be consider as revenue receipt and taxable under income from other sources.But there are certain case law in which compensation for temporary disability is also exempted by Tribunal. Read case Vinod Kumar Vs ITO 32 ITD 254 ITAT, Chandighar.
Interest received on this compensation is not taxable because it can not be termed as interest. It is compensation given for mental or physical injury suffered by person. Read CIT Vs Chiranjilal Multanimal Rai Bahadur (P) Ltd. and GDA vs Balbir Singhin civil Appeal No 7173 of 2003 vide order dated 17/03/2014.
It is to be noted that section 10(10BC) provides for exemption for compensation received for accident but it only govern statutory body like central or state government or local authority. new India Assurance doesn't fall in this category. So this section will not help you at all.
On Final Not it is advisable to rely on above mention case law and do not take any part of compensation in your tax bracket.