Can garage and living space lighting be on same circuit?

This is fine

There are no requirements for dedicated lighting circuits anywhere in a dwelling unit; in fact, with LEDs, having all your lights on a single circuit isn't that far-fetched an idea in this day and age. So, since your circuit is AFCI protected, it meets the requirements for living room lighting, and since the garage is attached, it can share house circuits, by and large. (Note that the 2020 NEC requires a dedicated 20A circuit for garage receptacles, but this has no bearing on the garage lighting circuit.)