Season the chicken pieces with salt and a teaspoon of chilly powder.
Heat oil in a kadhai or wok over medium-high heat. Add chicken and fry them on each side until browned (approximately 3-4 minutes each side). Transfer the chicken to a plate and set aside.
Add the chopped onion slices and fry them till they soften (approximately 10-12 minutes). Add the chopped tomatoes and fry them till the mixture becomes mushy and begins to leave oil.
Add spinach and fry them for another 5-6 minutes. Add the coconut milk, salt, garam masala and remaining chilly powder and mix well. Add water as needed to get it to the consistency you desire.
Add the chicken back to the wok and continue cooking on medium heat till it is done (approximately 10 minutes). Cover the wok and let it simmer for another 5 minutes.