It looks like the posted code isn't setting any of the alpha blend states, and I think the default is to not blend.
I have tried using all these below stated rendering states before assigning the pixel shader to the device and in the render loop per frame also but even then there is no effect on the alpha value
_device.SetTextureStageState(0, TextureStage.ColorOperation, TextureOperation.Modulate);
_device.SetTextureStageState(0, TextureStage.ColorArg1, TextureArgument.Texture);
_device.SetTextureStageState(0, TextureStage.ColorArg2, TextureArgument.TFactor);
Can any one please tell whats the proper method of setting alpha value for the texture to change its transperancy.