Consider the example “The bird sang the nursery rhyme beautifully. It made everyone in the room smile”. The pronoun ‘it’ here refers either to the bird or to the event of singing. This example is inherently ambiguous. It cannot be meaningfully disambiguated as an event or entity reference, as both readings result in the same text meaning. This study introduces a new dataset EMBITEXT to preserve ambiguity in the language by navigating through the ambiguity surrounding the pronominal reference to the entity or event. Oftentimes, ambiguity does not necessarily need to be resolved but is modelled carefully. Furthermore, this study explores the capacity of LLMs (Llama, Mistral, Gemini, Claude AI) to embrace ambiguity in generating text that exhibit referential ambiguity via an In-Context learning approach. To evaluate of the dataset, RoBERTa was finetuned on this data to model ambiguity while simultaneously distinguishing between entity or event references. Results demonstrate EmbiText’s capacity to advance the ongoing NLP research by modelling linguistic ambiguity in computational environments instead of fully disambiguating it, thereby retaining diverse interpretations where resolution may alter meaning.