diff --git a/controllers/mgmtcluster_classifier_test.go b/controllers/mgmtcluster_classifier_test.go
index aa15171..946faf0 100644
--- a/controllers/mgmtcluster_classifier_test.go
+++ b/controllers/mgmtcluster_classifier_test.go
@@ -27,6 +27,7 @@ import (
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
 	"k8s.io/apimachinery/pkg/runtime"
 	"k8s.io/apimachinery/pkg/types"
+	"k8s.io/klog/v2/textlogger"
 	"sigs.k8s.io/controller-runtime/pkg/client/fake"
 
 	libsveltosv1beta1 "github.com/projectsveltos/libsveltos/api/v1beta1"
@@ -93,6 +94,40 @@ var _ = Describe("ManagementClusterClassifier utils", func() {
 		})
 	})
 
+	Context("fetchResourcesForSelector", func() {
+		It("excludes a deleting resource unless ResourceSelector.IncludeDeletingResources is set", func() {
+			deleting := buildUnstructuredConfigMap("deleting-cm", map[string]string{testLabelEnv: testValueProd})
+			deleting.SetFinalizers([]string{"projectsveltos.io/test-finalizer"})
+			now := metav1.Now()
+			deleting.SetDeletionTimestamp(&now)
+
+			live := buildUnstructuredConfigMap("live-cm", map[string]string{testLabelEnv: testValueProd})
+
+			fakeClient := fake.NewClientBuilder().
+				WithScheme(mgmtTestScheme()).
+				WithObjects(deleting, live).
+				Build()
+
+			logger := textlogger.NewLogger(textlogger.NewConfig(textlogger.Verbosity(1)))
+
+			rs := &libsveltosv1beta1.ResourceSelector{
+				Group:   "",
+				Version: corev1.SchemeGroupVersion.Version,
+				Kind:    "ConfigMap",
+			}
+
+			resources, err := controllers.FetchResourcesForSelector(context.TODO(), fakeClient, rs, logger)
+			Expect(err).ToNot(HaveOccurred())
+			Expect(resources).To(HaveLen(1))
+			Expect(resources[0].GetName()).To(Equal(live.GetName()))
+
+			rs.IncludeDeletingResources = true
+			resources, err = controllers.FetchResourcesForSelector(context.TODO(), fakeClient, rs, logger)
+			Expect(err).ToNot(HaveOccurred())
+			Expect(resources).To(HaveLen(2))
+		})
+	})
+
 	Context("runClassificationLua", func() {
 		It("returns no clusters for empty resource list", func() {
 			script := `
diff --git a/controllers/mgmtcluster_classifier_utils.go b/controllers/mgmtcluster_classifier_utils.go
index 1ad2b17..1a8f62d 100644
--- a/controllers/mgmtcluster_classifier_utils.go
+++ b/controllers/mgmtcluster_classifier_utils.go
@@ -97,7 +97,7 @@ func fetchResourcesForSelector(ctx context.Context, c client.Client,
 	for i := range list.Items {
 		u := &list.Items[i]
 
-		if !u.GetDeletionTimestamp().IsZero() {
+		if !rs.IncludeDeletingResources && !u.GetDeletionTimestamp().IsZero() {
 			continue
 		}
 		if rs.Name != "" && u.GetName() != rs.Name {
diff --git a/go.mod b/go.mod
index 5890c63..eef4579 100644
--- a/go.mod
+++ b/go.mod
@@ -9,7 +9,7 @@ require (
 	github.com/onsi/ginkgo/v2 v2.32.2
 	github.com/onsi/gomega v1.43.0
 	github.com/pkg/errors v0.9.1
-	github.com/projectsveltos/libsveltos v1.15.0
+	github.com/projectsveltos/libsveltos v1.15.1-0.20260916064556-4b7dcd8c38fd
 	github.com/prometheus/client_golang v1.24.1
 	github.com/spf13/pflag v1.0.10
 	github.com/yuin/gopher-lua v1.1.2
diff --git a/go.sum b/go.sum
index 92ebdbc..fe2502f 100644
--- a/go.sum
+++ b/go.sum
@@ -208,8 +208,8 @@ github.com/pkg/errors v0.9.1/go.mod h1:bwawxfHBFNV+L2hUp1rHADufV3IMtnDRdf1r5NINE
 github.com/pmezard/go-difflib v1.0.0/go.mod h1:iKH77koFhYxTK1pcRnkKkqfTogsbg7gZNVY4sRDYZ/4=
 github.com/pmezard/go-difflib v1.0.1-0.20181226105442-5d4384ee4fb2 h1:Jamvg5psRIccs7FGNTlIRMkT8wgtp5eCXdBlqhYGL6U=
 github.com/pmezard/go-difflib v1.0.1-0.20181226105442-5d4384ee4fb2/go.mod h1:iKH77koFhYxTK1pcRnkKkqfTogsbg7gZNVY4sRDYZ/4=
-github.com/projectsveltos/libsveltos v1.15.0 h1:O0iE6ZCnft4Dy9P5bgZUG384FdoQGtkE5wWk1g7L2Qk=
-github.com/projectsveltos/libsveltos v1.15.0/go.mod h1:YKMqwREDkoQH84WTmixxsB8tN5V0cwOnWQ5hNjrg7xM=
+github.com/projectsveltos/libsveltos v1.15.1-0.20260916064556-4b7dcd8c38fd h1:DDcvUiTbr37R6tHMrBtMFjcRtr39VGV1Mm/dVdhyQwE=
+github.com/projectsveltos/libsveltos v1.15.1-0.20260916064556-4b7dcd8c38fd/go.mod h1:YKMqwREDkoQH84WTmixxsB8tN5V0cwOnWQ5hNjrg7xM=
 github.com/projectsveltos/lua-utils/glua-json v0.0.0-20251212200258-2b3cdcb7c0f5 h1:khnc+994UszxZYu69J+R5FKiLA/Nk1JQj0EYAkwTWz0=
 github.com/projectsveltos/lua-utils/glua-json v0.0.0-20251212200258-2b3cdcb7c0f5/go.mod h1:yVL8KQFa9tmcxgwl9nwIMtKgtmIVC1zaFRSCfOwYvPY=
 github.com/projectsveltos/lua-utils/glua-runes v0.0.0-20251212200258-2b3cdcb7c0f5 h1:YbsebwRwTRhV8QacvEAdFqxcxHdeu7JTVtsBovbkgos=
diff --git a/pkg/agent/sveltos-agent-in-mgmt-cluster.go b/pkg/agent/sveltos-agent-in-mgmt-cluster.go
index 1fc58d7..1cb0b81 100644
--- a/pkg/agent/sveltos-agent-in-mgmt-cluster.go
+++ b/pkg/agent/sveltos-agent-in-mgmt-cluster.go
@@ -63,7 +63,7 @@ spec:
           valueFrom:
             fieldRef:
               fieldPath: metadata.namespace
-        image: docker.io/projectsveltos/sveltos-agent@sha256:234ae2d4ace464b54bfbdb1affad42aca596ab1f55d581539faf7ae5c1479a86
+        image: docker.io/projectsveltos/sveltos-agent@sha256:aaaf3ab1e5798b005d959f5c614c14a1c630691f22d93df69ad6ad56186114a5
         livenessProbe:
           failureThreshold: 3
           httpGet:
diff --git a/pkg/agent/sveltos-agent-in-mgmt-cluster.yaml b/pkg/agent/sveltos-agent-in-mgmt-cluster.yaml
index 57a4824..54274c1 100644
--- a/pkg/agent/sveltos-agent-in-mgmt-cluster.yaml
+++ b/pkg/agent/sveltos-agent-in-mgmt-cluster.yaml
@@ -45,7 +45,7 @@ spec:
           valueFrom:
             fieldRef:
               fieldPath: metadata.namespace
-        image: docker.io/projectsveltos/sveltos-agent@sha256:234ae2d4ace464b54bfbdb1affad42aca596ab1f55d581539faf7ae5c1479a86
+        image: docker.io/projectsveltos/sveltos-agent@sha256:aaaf3ab1e5798b005d959f5c614c14a1c630691f22d93df69ad6ad56186114a5
         livenessProbe:
           failureThreshold: 3
           httpGet:
diff --git a/pkg/agent/sveltos-agent.go b/pkg/agent/sveltos-agent.go
index 95a017f..d90b354 100644
--- a/pkg/agent/sveltos-agent.go
+++ b/pkg/agent/sveltos-agent.go
@@ -222,7 +222,7 @@ spec:
           valueFrom:
             fieldRef:
               fieldPath: metadata.namespace
-        image: docker.io/projectsveltos/sveltos-agent@sha256:234ae2d4ace464b54bfbdb1affad42aca596ab1f55d581539faf7ae5c1479a86
+        image: docker.io/projectsveltos/sveltos-agent@sha256:aaaf3ab1e5798b005d959f5c614c14a1c630691f22d93df69ad6ad56186114a5
         livenessProbe:
           failureThreshold: 3
           httpGet:
diff --git a/pkg/agent/sveltos-agent.yaml b/pkg/agent/sveltos-agent.yaml
index b19b3e5..e6d4e12 100644
--- a/pkg/agent/sveltos-agent.yaml
+++ b/pkg/agent/sveltos-agent.yaml
@@ -204,7 +204,7 @@ spec:
           valueFrom:
             fieldRef:
               fieldPath: metadata.namespace
-        image: docker.io/projectsveltos/sveltos-agent@sha256:234ae2d4ace464b54bfbdb1affad42aca596ab1f55d581539faf7ae5c1479a86
+        image: docker.io/projectsveltos/sveltos-agent@sha256:aaaf3ab1e5798b005d959f5c614c14a1c630691f22d93df69ad6ad56186114a5
         livenessProbe:
           failureThreshold: 3
           httpGet: