Applicability of section 297

Hi!

Could any one please elaborate on the applicability of section 297?

My specific queri is..

Whether section is applicable when both the companied involved in the transaction are private limited cos. 

Goods are manufactured and supplied to the other group company at a low price than the market value of such goods.

The other co supplies the goods to the end customers after doing some value addition.

Kindly express your views and clarify the issue.

Thanks!