From the DE's point of view, flying in IMC is a risky. What if the
student can't do it? He would have to take over in an airplane that he
may not be familiar with. There are also the added unknowns of dealing
with ATC. ATC might not be able to give the DE the clearances he needs
to satisfy the PTS.

From the student's point of view, well, personally, I would prefer not
to do it. I have had enough problems with ATC to not want to add that
to my workload.

But, bottom line, it is up to the DE. Some have given checkrides in
IMC. It is not prohibited.