If 'He' possesses something we attach the 's' to the pronoun to make 'his', as in 'his book'.
If he is something, we'd use the apostophe, as in 'he's angry'.
It's never: 'his angry' or 'he's book'. 'He's angry' and 'his book'.
In the same manner, the 's' attaches to the 'it' when in the possessive case and just rides along with the apostrophe when used in a contraction.