Incomplete combustion of coal and petroleum:

(A) increases air pollution.

(B) increases efficiency of machines.

(C) reduces global warming.

(D) produce poisonous gases.

The correct option is:

Incomplete combustion of coal and petroleum occurs when there is an insufficient supply of oxygen. This leads to:

1. The formation of carbon monoxide ($CO$), which is a highly poisonous gas, and unburnt carbon particles (soot), which increases air pollution. Thus, statements (A) and (D) are correct.
2. Incomplete combustion reduces the efficiency of machines because less energy is released per unit of fuel compared to complete combustion. Thus, statement (B) is incorrect.
3. It does not reduce global warming; in fact, carbon dioxide and soot particles contribute to global warming. Thus, statement (C) is incorrect.

Therefore, statements (A) and (D) are correct, making option (B) the right choice.