Both of the two reasons are true.
Cut corners, notches, and 'BB' holes were used to mark Lps taht could not be returned for credit. (Either by the consumer, retailer, or distributor)
The notch was usually for actual overstock, being sold off at a big discount.
BB holes, and cut off corners were more often giveaways, as promos, but could (seldom) also be ordinary overstock.
Same with CDs. The circle cut into the barcode is always a promo, and the side of the jewelcase sawcut is overstock.