diff --git a/cmd/argocd/commands/app.go b/cmd/argocd/commands/app.go
index 8bb7b0b8e8968..f45efb427053c 100644
--- a/cmd/argocd/commands/app.go
+++ b/cmd/argocd/commands/app.go
@@ -1027,7 +1027,7 @@ func findandPrintDiff(ctx context.Context, app *argoappv1.Application, proj *arg
 	items := make([]objKeyLiveTarget, 0)
 	if diffOptions.local != "" {
 		localObjs := groupObjsByKey(getLocalObjects(ctx, app, proj, diffOptions.local, diffOptions.localRepoRoot, argoSettings.AppLabelKey, diffOptions.cluster.Info.ServerVersion, diffOptions.cluster.Info.APIVersions, argoSettings.KustomizeOptions, argoSettings.TrackingMethod), liveObjs, app.Spec.Destination.Namespace)
-		items = groupObjsForDiff(resources, localObjs, items, argoSettings, app.InstanceName(argoSettings.ControllerNamespace))
+		items = groupObjsForDiff(resources, localObjs, items, argoSettings, app.InstanceName(argoSettings.ControllerNamespace), app.Spec.Destination.Namespace)
 	} else if diffOptions.revision != "" {
 		var unstructureds []*unstructured.Unstructured
 		for _, mfst := range diffOptions.res.Manifests {
@@ -1036,7 +1036,7 @@ func findandPrintDiff(ctx context.Context, app *argoappv1.Application, proj *arg
 			unstructureds = append(unstructureds, obj)
 		}
 		groupedObjs := groupObjsByKey(unstructureds, liveObjs, app.Spec.Destination.Namespace)
-		items = groupObjsForDiff(resources, groupedObjs, items, argoSettings, app.InstanceName(argoSettings.ControllerNamespace))
+		items = groupObjsForDiff(resources, groupedObjs, items, argoSettings, app.InstanceName(argoSettings.ControllerNamespace), app.Spec.Destination.Namespace)
 	} else if diffOptions.serversideRes != nil {
 		var unstructureds []*unstructured.Unstructured
 		for _, mfst := range diffOptions.serversideRes.Manifests {
@@ -1045,7 +1045,7 @@ func findandPrintDiff(ctx context.Context, app *argoappv1.Application, proj *arg
 			unstructureds = append(unstructureds, obj)
 		}
 		groupedObjs := groupObjsByKey(unstructureds, liveObjs, app.Spec.Destination.Namespace)
-		items = groupObjsForDiff(resources, groupedObjs, items, argoSettings, app.InstanceName(argoSettings.ControllerNamespace))
+		items = groupObjsForDiff(resources, groupedObjs, items, argoSettings, app.InstanceName(argoSettings.ControllerNamespace), app.Spec.Destination.Namespace)
 	} else {
 		for i := range resources.Items {
 			res := resources.Items[i]
@@ -1105,7 +1105,7 @@ func findandPrintDiff(ctx context.Context, app *argoappv1.Application, proj *arg
 	return foundDiffs
 }
 
-func groupObjsForDiff(resources *application.ManagedResourcesResponse, objs map[kube.ResourceKey]*unstructured.Unstructured, items []objKeyLiveTarget, argoSettings *settings.Settings, appName string) []objKeyLiveTarget {
+func groupObjsForDiff(resources *application.ManagedResourcesResponse, objs map[kube.ResourceKey]*unstructured.Unstructured, items []objKeyLiveTarget, argoSettings *settings.Settings, appName, namespace string) []objKeyLiveTarget {
 	resourceTracking := argo.NewResourceTracking()
 	for _, res := range resources.Items {
 		var live = &unstructured.Unstructured{}
@@ -1120,7 +1120,7 @@ func groupObjsForDiff(resources *application.ManagedResourcesResponse, objs map[
 		}
 		if local, ok := objs[key]; ok || live != nil {
 			if local != nil && !kube.IsCRD(local) {
-				err = resourceTracking.SetAppInstance(local, argoSettings.AppLabelKey, appName, "", argoappv1.TrackingMethod(argoSettings.GetTrackingMethod()))
+				err = resourceTracking.SetAppInstance(local, argoSettings.AppLabelKey, appName, namespace, argoappv1.TrackingMethod(argoSettings.GetTrackingMethod()))
 				errors.CheckError(err)
 			}
 
diff --git a/test/e2e/cluster_objects_test.go b/test/e2e/cluster_objects_test.go
index 4388932296673..4299a35c55c00 100644
--- a/test/e2e/cluster_objects_test.go
+++ b/test/e2e/cluster_objects_test.go
@@ -5,12 +5,14 @@ import (
 
 	"github.com/argoproj/gitops-engine/pkg/health"
 	. "github.com/argoproj/gitops-engine/pkg/sync/common"
+	"github.com/stretchr/testify/assert"
 
 	. "github.com/argoproj/argo-cd/v2/pkg/apis/application/v1alpha1"
+	. "github.com/argoproj/argo-cd/v2/test/e2e/fixture"
 	. "github.com/argoproj/argo-cd/v2/test/e2e/fixture/app"
+	"github.com/argoproj/argo-cd/v2/util/argo"
 )
 
-// ensure that cluster scoped objects, like a cluster role, as a hok, can be successfully deployed
 func TestClusterRoleBinding(t *testing.T) {
 	Given(t).
 		Path("cluster-role").
@@ -20,5 +22,35 @@ func TestClusterRoleBinding(t *testing.T) {
 		Then().
 		Expect(OperationPhaseIs(OperationSucceeded)).
 		Expect(HealthIs(health.HealthStatusHealthy)).
+		Expect(SyncStatusIs(SyncStatusCodeSynced)).
+		And(func(app *Application) {
+			diffOutput, err := RunCli("app", "diff", app.Name, "--revision=HEAD")
+			assert.NoError(t, err)
+			assert.Empty(t, diffOutput)
+		}).
+		When().
+		SetTrackingMethod(string(argo.TrackingMethodAnnotation)).
+		Sync().
+		Then().
+		Expect(OperationPhaseIs(OperationSucceeded)).
+		Expect(SyncStatusIs(SyncStatusCodeSynced)).
+		Expect(HealthIs(health.HealthStatusHealthy)).
+		And(func(app *Application) {
+			diffOutput, err := RunCli("app", "diff", app.Name, "--revision=HEAD")
+			assert.NoError(t, err)
+			assert.Empty(t, diffOutput)
+		})
+}
+
+// ensure that cluster scoped objects, like a cluster role, as a hook, can be successfully deployed
+func TestClusterRoleBindingHook(t *testing.T) {
+	Given(t).
+		Path("cluster-role-hook").
+		When().
+		CreateApp().
+		Sync().
+		Then().
+		Expect(OperationPhaseIs(OperationSucceeded)).
+		Expect(HealthIs(health.HealthStatusHealthy)).
 		Expect(SyncStatusIs(SyncStatusCodeSynced))
 }
diff --git a/test/e2e/testdata/cluster-role-hook/cluster-role.yaml b/test/e2e/testdata/cluster-role-hook/cluster-role.yaml
new file mode 100644
index 0000000000000..456e1b12fbd33
--- /dev/null
+++ b/test/e2e/testdata/cluster-role-hook/cluster-role.yaml
@@ -0,0 +1,15 @@
+apiVersion: rbac.authorization.k8s.io/v1
+kind: ClusterRoleBinding
+metadata:
+  namespace: cert-manager
+  name: my-cluster-role-binding
+  annotations:
+    argocd.argoproj.io/hook: PreSync
+roleRef:
+  apiGroup: rbac.authorization.k8s.io
+  kind: ClusterRole
+  name: cluster-admin
+subjects:
+  - kind: ServiceAccount
+    name: default
+    namespace: default
diff --git a/test/e2e/testdata/cluster-role/pod.yaml b/test/e2e/testdata/cluster-role-hook/pod.yaml
similarity index 100%
rename from test/e2e/testdata/cluster-role/pod.yaml
rename to test/e2e/testdata/cluster-role-hook/pod.yaml
diff --git a/test/e2e/testdata/cluster-role/cluster-role.yaml b/test/e2e/testdata/cluster-role/cluster-role.yaml
index cb6cd7c1b3e42..cc5365bb3f4de 100644
--- a/test/e2e/testdata/cluster-role/cluster-role.yaml
+++ b/test/e2e/testdata/cluster-role/cluster-role.yaml
@@ -1,10 +1,7 @@
 apiVersion: rbac.authorization.k8s.io/v1
 kind: ClusterRoleBinding
 metadata:
-  namespace: cert-manager
   name: my-cluster-role-binding
-  annotations:
-    argocd.argoproj.io/hook: PreSync
 roleRef:
   apiGroup: rbac.authorization.k8s.io
   kind: ClusterRole
@@ -12,4 +9,4 @@ roleRef:
 subjects:
   - kind: ServiceAccount
     name: default
-    namespace: default
\ No newline at end of file
+    namespace: default