New answers tagged transparency
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Clip dataframe by shape is not supporting for MapService because of the performance. So the performance reason, you would better to clip the raster data source directly. I guess you have Spatial Analyst extension license, then you could use "Extract by Mask" tool.
http://resources.arcgis.com/en/help/main/10.1/index.html#//009z0000002n000000
Hope this help ...
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The link below seems to be a similar question
It gives a step by step guide to doing so.
How to make transparent the background of a topographic map in QGis 1.8.0?
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