Setoff of losses

Hi friends,

I have a query regarding Setoff under Income Tax Act.

My client is having Salary Income, House property loss and Long Term Capital Gain. Now I have two choices.

Option 1. Setoff Salary income with House Property loss and balance to be taxed at normal rates and entire long term capital gains at 20 %

Option 2. Setoff Loss from House Property with Longterm Capital Gain and Balance amount taxed at 20% and entire Salary Income to be taxed at normal rates.

The more benefecial to the client is Option 2. I need to know whether I can take the choice which is more benefecial to the client or is there any particular rule as to which we should adhere. 

Please help.